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from Breakingviews:

Iraq troubles are unlikely to bring new oil crisis

By Fiona Maharg-Bravo

The author is a Reuters Breakingviews columnist. The opinions expressed are her own.

The continued violence in Iraq looks like a harbinger of a sharp cutback from the world’s seventh-largest oil producer. But the bulk of Iraq’s production is still secure. Even though the Middle East has clearly become less stable, it will still take a cascade of problems to create a big oil price shock.

The oilfields which account for around 90 percent of Iraq’s production are in the still peaceful south of the country, far from the conflict zones. Oilfield security is tight and has recently been increased. The evacuation of non-essential staff by BP and other foreign operators is not an immediate threat to output, since these large fields are predominantly staffed by locals. Oil exports were near record rates in June, according to industry sources cited by Reuters.

Of course, the oil price would spike if every drop of Iraqi exports disappeared altogether. An Iraqi conflict that extended into the southern Shi’ite strongholds would be likely to spark trouble in other producers in the region.

Current Iraqi production is 3.4 million barrels of oil a day, of which 2.7 million are exported. There is unlikely to be enough spare capacity elsewhere to compensate comfortably if supply suddenly dropped. The International Energy Agency is probably optimistic in its estimate that OPEC has 3.3 million daily barrels of effective spare capacity, four-fifths of which is in the hands of Saudi Arabia.

The religion-fueled fight in Syria

The second round of peace talks in Geneva between representatives of Bashar Al-Assad’s regime in Syria and rebel forces has ended with both sides blaming each other for the lack of progress. Beyond the finger-pointing, however, lies a growing danger to the goal of a negotiated settlement. The civil war’s religious divides are widening, making compromise unthinkable.

Representatives of the Syrian regime went to Geneva solely with the hope of convincing the opposition to let President Bashar al-Assad stay in power so he can forge an alliance against jihadist forces fighting in Syria, most notably the al Qaeda affiliates Jabhat al-Nusra and the Islamic State in Iraq and the Levant. Their argument — one that many, including former U.S. Ambassador to Iraq Ryan Crocker, have made — was that Assad is better than any likely alternative.

But the Syrian National Coalition, representing opposition forces, rejected the proposal outright. The coalition, which purports to be a post-Assad transitional government in waiting, has decided, along with Secretary of State John Kerry, that al Qaeda will be dealt with after Assad is gone. Its standing, however, is severely constrained by its lack of political credibility on the ground. It has become little more than a vehicle for Qatar and Saudi Arabia to vie for control of Syrian politics.

Is there a ‘right’ path for the U.S. in Syria?

Key parties to the conflict in Syria are meeting in Switzerland on Wednesday. The participants have been downplaying expectations that the “Geneva II” peace conference — which will bring together for the first time representatives from the Assad government and various rebel groups along with major international players — will resolve the conflict, or even bring about a ceasefire.

For the U.S. government, the crucial issue at this meeting and beyond is determining if and how to intervene and provide support in a conflict where there may no longer be real “good guys,” or supporters of U.S. national interests, to back. This is particularly important given Washington’s interwoven interests throughout the region — not only in Syria, but in Iraq, Iran, Lebanon, Turkey and beyond.

U.S. support of the Afghan mujahideen against the Soviet Union during the Cold War teaches two valuable lessons for the current Syrian conflict. First, understand who we are helping, what their goals are and how these goals may differ from those of the United States. Second, think in advance about the endgame.

Human Rights Day: Still pursuing religious freedom

December 10 marks Human Rights Day, the 65th anniversary of the landmark Universal Declaration of Human Rights (UDHR), signed by 48 nations — with just eight abstentions.

Sixty-five years ago, naysayers insisted it was nobody else’s business how governments behaved within their borders. The declaration confronted this cynical view — and continues to do so today. Human rights abuses and their consequences spill beyond national borders, darkening prospects for harmony and stability across the globe. Freedom of religion or belief, as well as other human rights, are essential to peace and security. They are everyone’s business.

Each signatory nation pledged to honor and protect these rights. For example, the declaration provides the foundation for much of the agenda of the U.S. Commission on International Religious Freedom, on which we serve.

Too many cooks in the Iran nuclear kitchen

Last weekend, after years of failed negotiations, the “P5+1” nations — the five permanent members of the United Nations Security Council (the United States, Britain, France, Russia and China) plus Germany — finally appeared to be on the verge of a deal with Iran regarding curbs on its nuclear program.

All except France were ready to sign a stopgap agreement that would offer Iran limited sanctions relief in return for a freeze in its nuclear program. But Paris torpedoed the arrangement at the last moment — denigrating it as “a sucker’s deal.”

France’s torpedoing of the agreement appears less related to genuine nuclear proliferation concerns than with trying to curry favor with anti-Iranian countries — like Saudi Arabia and the United Arab Emirates – who commission and buy expensive French military, satellite and nuclear hardware.  The lesson in this latest failure is there ought to be a single point of contact with Iran endowed with executive authority over resolving the nuclear issue.

Does everyone have a price?

DUBAI/

On Monday I went to Bloomingdales, the Gap and Starbucks but passed on a visit to Magnolia Bakery. Instead I  stopped by the St. Moritz bakery where you can order hot chocolate and sit by a video of a cozy winter  fire that overlooks the indoor ski slope and is just around the corner from the largest candy store in the world, which happens to face an aquarium that occupies an entire wall on one side of the world’s largest shopping malls. This by the way is opposite of what claims to be the world’s largest candystore whose mission statement is to make every day “happier’. Earlier, while exploring the watery depths of the bright Pink Atlantis Hotel (one of the white elephants of the property crash of 2007) I knew it was really the last kingdom because the fish swam around two cracked thrones and other kitschy stone artifacts.

Dubai is utterly overwhelming, the kind of  dystopia that blogger Evgeny Morozov sees in Huxley, a consumeristic paradise where mind-numbing shopping replaces real thought. Most of the I had no idea where I was except that my passport had been stamped Dubai  and many of the mall-going women were shrouded in black. After a few hours I sank into a state of ennuie. Given boatloads of oil money in the 1970s and the chance to build a whole new city, who on earth would decide to build a series of shopping malls?

It’s not like the developers didn’t have ambition, what with the architecture that demands superlatives — the gondolas, medieval stone houses and soaring illuminated sky scrapers and islands built in absurd never-before-seen configurations. But why not build a museum with, say, the most incredible collection in the world or a university with the finest research laboratories? With so much money why build this Disneyland? And what about the workers who make up most of the population?

Paper shows perils of projecting oil demand

Global oil consumption could hit a massive 134 million barrels per day (bpd) by 2030, up from 85 million bpd currently, and demand is unlikely to peak in the foreseeable future, according to a recent academic paper.

While the projection has achieved widespread headlines, and been seized on by oil bulls as further evidence the world will struggle to meet rising demand, it is based on controversial  assumptions about how emerging-market consumption will respond to increasing prices.

It is contained in a careful econometric study published by Joyce Dargay and Dermot Gately, “World oil demand’s shift toward faster growing and less price-responsive products and regions.”

Anything but oil

kemp.jpg– John Kemp is a Reuters columnist. The views expressed are his own —

As OPEC ministers meet in Angola this week, they can congratulate themselves on a brilliant piece of market management.

Quick decision-making and aggressive output cuts over the last 18 months have stabilised prices at their highest level in real terms since the early 1980s. And this despite the deepest recession since World War Two.

Obama and flawed logic on Cuba

Bernd Debusmann - Great Debate

– Bernd Debusmann is a Reuters columnist. The opinions expressed are his own –

The U.S. case for isolating Cuba and keeping it out of international meetings such as this week’s Summit of the Americas sounds simple: the country doesn’t have democratically elected leaders, it holds political prisoners, it violates human rights and its citizens can’t travel freely. All perfectly true.

But if the logic used for isolating Cuba were applied consistently, neither China nor Saudi Arabia, for example, should have taken part in the London G20 summit. The U.S. State Department estimates China has “tens of thousands” of political prisoners and describes it as “an authoritarian state in which the Chinese Communist Party … is the paramount source of power.”

In China, OPEC’s nightmare comes true

John Kemp Great Debate– John Kemp is a Reuters columnist. The opinions expressed are his own –

China’s decision to link domestic fuel prices indirectly to the international crude oil market, subject to a price cap, while hiking the consumption tax on gasoline and diesel and phasing out a variety of road tolls and other fees shows Saudi Arabia’s worst fears about high prices and demand destruction are starting to come true.

It seems likely to confirm the kingdom’s determination to see prices stabilize around $75 per barrel, well below recent price peaks, and far below the level sought by some other OPEC members, as well as international oil companies and advocates of alternative energy.

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