Closure of the Straits of Hormuz is a Joint Act by Russia and Iran


by ayatoilet1

Russian oil production costs average at $84 a barrel. Any price drop below that would surely shut down oil production there. But more importantly, the Russian government had based its budget for this calendar year with oil forecast at a price of $110 a barrel. Revenues from taxes and fees from the russian oil and gas industry make up over 50% of Russia's Government income. With Oil prices currently forecast to drop to $60 a barrel by the end of the summer, newly elected (nudge, nudge, wink, wink...) Putin faces imminent bankruptcy.

Strangely, Iran's government too had forecast Oil at $110 a barrel for this year (which is offset by three months from Russia's year). With the imminent reduction of Iran's total oil exports because of sanctions, combined with a significant drop in oil prices and the fact that Iran has had to basically 'give away' oil at well below market prices to any available buyers...Iran too is facing imminent bankruptcy.

There is now an oil glut in the world. New production from Brazil, Azerbaijan and Iraq combined with serious reduction in demand because of the economic slow down in Europe and import substitution in the US (with ethanol from Corn) has created a glut. And prices are forecast to keep droping. Its the perfect time to impose sanctions on Iran, and at the same time undermine Putin. I, for one, had been shocked that 'serious' sanctions had NOT been placed on Iran for over 30 years despite the rhetoric in the west. I had always privately believed that the west was supporting the mullahs and secretly working with them. But of coarse, any sanctions on oil in the past would have caused more damage on the west than Iran directly. Prices would have caused serious inflation and economic collapse in the west. Both Iran and Russia have not changed for the better, and now is the time that the west can afford a fight. Times have changed.

So what are Putin's and the Mullah's survival options? Well they have to find a way to lift up the price of oil! Right?

20% of the world's oil travels through the straits of hormuz and any restrictions on this traffic could drive prices sky rocketing! Even without restrictions, just the mere threat is enough to push prices back up. It suits both Russia and Iran.

Iran for sure would not be 'threatening" if it did not feel it had a strong position to counter moves against it. And strength in this case, means it must have Russian backing - whether tacit or explicit.

Russia for sure has been cosying up to Iran in recent times. Iran, that was once a stalwarth ally of the west, is now in many ways a Russian sattelite. Russia has been supplying Nuclear technology to Iran, but also many key components for its defense industry. We all know of news stories of countless Russian planes have dropped out of the sky, as Iranian airlines have beaten sanctions by buying rundown Russian planes at retail ticket prices. The Russians have done well milking Iran and Iranians. Its only taked 42 years for Iran to build a nuclear power plant.

But also Iran has joined Russia and China in a military alliance called the Shanghai Cooperation Treaty. Its not quite NATO, but it has placed Iran squarely in their camp strategically. China has NOT joined the west in sanctioning Iranian oil. And in recent weeks has even doubled its purchasing volumes. 

I am sometimes shocked at how 'sophisticated' Iran military has become and how 'sophisticated' its international posture has evolved. Then I realize that these yoyo mullahs are being coached quietly in the back rooms by the Russians.

What I find so surprising is that these same Mullahs must realize that the Russians were Saddam Husseins number one arms merchant. They also killed literally hundreds of thousands of Russian sympathisers and communists inside Iran right after the revolution. They even supported the Afghan fighters against Russian occupation. Yet they have now reconciled themselves with working with the 'devil'.

One major problem with all this, is that if in fact the Russians stand up behind the Mullahs in any sort of a battle, it really could result in World War III. Western response needs to be measued and calculated. It can't be that some Cowboy ship captain in the Persian Gulf decides on his own to shoot down a plane with anti-aircraft weapons and ends up starting World War III.

It is a tragedy that a once strong ally of the west has now succumbed to Russian influence. Its very sad. Very sad. How did we get here?

In the long-run one has to be happy that the Mullahs and Putin are both on their way out. If oil prices drop as they should, I will be counting the days, hours, even minutes and seconds it takes to pull the carpet from both these scum bags. Putin has destroyed Russian democracy and replaced it with corrupt and evil hench men. What was once a booming economic tiger has dwindled to near bankruptcy. As for the Mullahs, they have pissed on both Islam and Iran. Iran is neither Islamic nor a republic...its a Mullah Mafia regime. If both Iran and Russia are transformed, and become strong vibrant and transparent markets, they could transform the world's economic demise.

Let's hope the desired changes take effect. And lets hope these sanctions stick. And lets hope all this maneuvering by the Mullahs and the Russians adds up to nothing. Maybe by this time next year, we can visit a newly open, secular and democratic Iran. I might even fly via Moscow and celebrate a newly democratic russia at the same time.

We are living in very interesting times.


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Thanks for Great Blog

by Azarbanoo on

I always enjoy your informative writing.  Thanks.


A: oil price really should

by alimostofi on

A: oil price really should be very high and it is best to treat it as a precious commodity. That is why NPC was created.

But why we need to have wars and supply threats to manipulate the price up is another question. Ironically the mullahs have the same view as the Shah on this.

Ultimately in an ideal world we need to get away from fossil fuel. So the analysis should be to ask who benefits from oil. Why haven't we all moved to alternatives that have been around for two generations.

My answer is that some companies have just not bothered into becoming an energy company instead of just an oil company. And of course a lot of legacy equipment still runs on pollutant energy.

FB: astrologer.alimostofi


Producton Cost May be Even Higher

by ayatoilet1 on


I read your link. It was an old reuter's brief from 3 years ago (2009) with details of Kazakh NOT Russian production costs. Note that Kazakh Oil is dominated by Chevron. Russian Oil is dominated by its own oil companies.

Most Russian Oil is in Siberia. And the $84 per barrel figure is an average number. Some fields cost more to produce and deliver. Remember, the oil has to be shipped out from central siberia to a port (like Vladivostok) in the middle of winter (often).

I have posted several articles invloving Russian oil costs, but the best I can do right this second is to point you to a news item I published on this site (talking about Russian's 'torpedoing' the Nuclear talk/negotiations with Iran and it has a cost picture for Russian Oil). Just run a search with my name and you will find it.

Thanks for reading this blog. Like they said during the watergate scandal - you have to follow the money! (to determine the truth)


Production cost is not that

by alimostofi on

Production cost is not that high for Russia.


FB: astrologer.alimostofi

Multiple Personality Disorder

This is an excellent original blog

by Multiple Personality Disorder on

Thank you for the hard work.


Regarding Iran, Iranians have not been abandoned by the USA

by amirparvizforsecularmonarchy on

Iranians have been betrayed by the USA.  Putin did not betray Iranians, Putin did not bring the mullahs to power, Putin is not in error for reaping the benefits of US Stupiditity in thought and belief.  Never in the History of Man has a leading and Peerless Super Power, in todays case the USA, being able to maintain its position by spreading extremism, military bases and robbing others of their resources.  Everytime this has been done so far, it has lead to a war between all the leading powers.  And the #1 power which was always ahead and believed it could win, never did.  What's interesting is that in your analysis you don't take over 300 years of modern history since industrialization into account.  For now Ayatoilet, let the countries who declared the peace, progress, human rights, freedom, justice and democracy of the people of Iran their #1 enemy a people who must all be betrayed by supporting criminals, the USA, the UK, & France, figure out how to climb out of the depression they have all been stuck in for the last 5 years.  Who knows if we are optimists we can hope that by 2020 they may get out of their current depression and create their people some jobs.  Were you aware that your narrative also doesn't take into account that our late Shah, in practice, was one of the most Law Abiding & Democratic Leaders of the last certury in the entire world, despite neither the society nor the system within Iran being democratic.  Who knows, predicting the future solely based on the past is only pcassionally accurate, there is too much information that is not available.

Other than the USA/UK/Frances support for IRI & their own economic depression the west is stuck in, lets also wait and see what the USA gets out of backing their MeK goons as the Wests democratic solution for Iran which they have been asisting in not too subtle ways.  Please give us your 3 votes when you get a chance below.