Terrorists see oil as new weapon

Terrorists see oil as new weapon

Youssef M. Ibrahim, CG News

The global oil market environment is becoming a target
of opportunity for terrorists and world powers. The terrorists
increasingly see disruptions of oil facilities as a valid
strategy in their war against governments that they oppose. World
powers like China, Japan, the United States and India are driven
into increasing confrontation fighting for diminishing oil
supplies.

These are sinister developments, ingredients for the next
tsunami to hit the already turbulent world of oil where prices
have gone so high that they are depressing world economies.

The trouble from insurgents blowing up oil facilities is no
less dangerous than the pressures from China, India and Japan's
voracious appetite for more oil.

China is a major superpower showing that it will not hesitate
to use pressure to secure oil. The Chinese are developing a
strong foothold in Pakistan, where thousands of Chinese workers
are building a new port in Baluchistan at Gwadar, right at the
entrance to the Persian Gulf.

One of the main causes of friction between China and Japan now
involves access to oil and gas deposits in the East China Sea.
When the Security Council tried to impose sanctions on Sudan -
one of China's main oil suppliers - over the issue of Darfur, the
Chinese said no.

In May when a massacre occurred in Uzbekistan with hundreds of
people killed on the orders of President Islam Karimov, the
United States and Europe asked for an international
investigation. China, which had signed a $600 million gas deal
with Uzbekistan, blocked it.

One needs to ring the alarm bell as this Asian pressure
combines with terrorist attacks to form the elements of the
perfect storm heading directly toward the Arabian Peninsula.

At the moment Iraq is the biggest model for jihadists seeking
to spread chaos, fight the pro-American government there and
eventually defeat the United States invasion - and the American
project in the region by attacking oil facilities. But soon this
tactic will travel to other oil-producing countries. There have
already been attacks on oil installations in Chechnya, Pakistan,
India, Russia, Azerbaijan and Nigeria.

Since the American invasion of Iraq, there have been more than
300 attacks on pipelines, refineries, and other facilities. Iraqi
refineries have been looted to a point that the United States and
Kuwait are supplying gasoline and heating oil to Iraq, which sits
on top of one of the world's largest oil reserves.

Iraqi oil production has fallen drastically, and with it so
have Iraqi oil revenues. The Northern pipeline that carries Iraqi
oil to Turkey, which is repeatedly blown up, has never really
functioned since the war.

The decreasing oil supplies, the Chinese-Japanese demand
juggernaut and insurgents targeting oil have added an "anxiety
premium" to the price of oil - a fear tax if you will - which
accounts for more than $10 a barrel, leading to the current
prices of $65 per barrel. The winter might well see prices going
higher.

Western intelligence agencies are particularly concerned that
many of the jihadists fighting in Iraq are non-Iraqi Arabs from
Arab oil-producing countries. They come from Saudi Arabia,
Algeria, Sudan, Egypt, Kuwait and Qatar, among others. These
jihadists will return to their countries supplied with a well-
practiced model. Do the math.

The oil crisis we face today is not the supply-driven crisis
we had in 1973, when the late King Faisal of Saudi Arabia led the
oil boycott of the United States and the West to protest against
their support of Israel in the October war of that year. This is
a demand-driven crisis, which leaves the world more dependent on
its most politically unstable area: the Greater Middle East,
where 77 percent of the world's oil reserves are located.

High prices will eventually push world economies to
aggressively pursue a search for alternative sources of energy
including solar, nuclear and oil sands, which are very expensive
to create or extract, but everything is relative.

It still takes time to get from here to there.

We are in a bottleneck that will last for five to 10 years.
OPEC is not the solution, as its members are already producing
all the oil that they have. Nor are they spending money to
increase production.

In fact, at this time, NO oil producer - from Russia to Saudi
Arabia - is spending money on boosting its oil infrastructure to
produce more oil. Instead, they are using huge new revenues to
build up their economies and pay debts.

No one can blame them. They like the high prices and need the
money.

As for the jihadist terrorists, they are already secure in the
knowledge that blowing up an oil refinery or pipeline is much
easier than ramming planes into the World Trade Center or blowing
up subways in London and Madrid.

Their philosophy is guided by the likes of Osama bin Laden,
whose core belief is that war against what he calls "infidels" is
a war against Western economies dependent on energy. So fasten
your seat belts. We are in for a rough ride on oil prices.

The writer is a former Middle East
correspondent for the New York Times and energy editor of the
Wall Street Journal, and now is managing director of the Dubai-
based Strategic Energy Investment Group, a consulting firm.