If there's one thing we could count on in the ever-shifting sands of the Middle East, it's that the Bush family and the ruling House of Saud go back a long way. And many said the reason we stuck around Iraq so long is because the Saudis insisted we stick around to help balance out the Iranian influence (we could also count on the eternal emnity between the Sunni Saudis and Shiite Iranians).
Maybe not so much anymore. According to
the Washington Post ... President Bush enjoys hosting formal state dinners about as much as having a root canal. Or proposing tax increases. So his decision to schedule a mid-April White House gala for Saudi Arabia's King Abdullah signified the president's high regard for an Arab monarch who is also a Bush family friend. Now the White House ponders what Abdullah's sudden and sparsely explained cancellation of the dinner signifies. Nothing good — especially for Condoleezza Rice's most important Middle East initiatives — is the clearest available answer.So then, who is Abdullah hanging around with?
Abdullah gave a warm welcome to Iranian President Mahmoud Ahmadinejad in Riyadh in early March, not long after the Saudis pressured Palestinian President Mahmoud Abbas into accepting a political accord that entrenches Hamas in an unwieldy coalition government with Abbas's Fatah movement.
RIYADH, Saudi Arabia — King Abdullah of Saudi Arabia told Arab leaders on Wednesday that the American occupation of Iraq is “illegal,” and he warned that unless Arab governments settle their differences, foreign powers like the United States would continue to dictate the region’s politics.
So the two biggest oil producers in the Middle East, who previously hated each other with the white-hot intensity of a summer desert sun, seem to be making up. I guess W can take credit for that much, if he wants to.
Now, let's look at an interesting chart of oil ...
Now do you see why I added energy stocks to
Red-Hot Canadian Small-Caps and
Red-Hot Resources yesterday? I'm not so much concerned about the Iran crisis-du-jour -- it could become something bigger, or it could be resolved overnight. It's the longer-term trends that have me concerned. I think we should play those longer-term trends.
Two other fundamental drivers to consider (ripped from the pages of yesterday's
Red-Hot Canadian Small-Caps) ...
* Rising demand. According to an Energy Department report, gasoline demand keeps climbing, up about 2% from a year ago. Meanwhile, oil stockpiles dropped in the most recent report, and gasoline supplies fell for a seventh straight week. You need oil to make gasoline, and this is pressuring oil prices higher. Gasoline demand in the U.S. peaks between Memorial Day in late May and Labor Day in early September. We can expect upward pressure on oil prices during that time frame.
* Is a bad hurricane season brewing? The North Atlantic hurricane season runs from June 1 to Nov. 30. But we’re seeing signs that the La Nina weather system -- which breeds more hurricanes in the Atlantic -- is forming. And Atlantic hurricanes can stomp their way into the Gulf of Mexico, which is packed with oil and natural gas platforms.
Indeed, hurricane activity may be as much as 75% above the historical average this year as warm water feeds storms, forecaster Tropical Storm Risk said on March 21.
An estimated 17 tropical storms may form, of which four will become major hurricanes with winds topping 111 miles per hour (179 kilometers per hour), the forecaster said.
Now, it’s impossible to accurately predict how many hurricanes we’ll have in a season. Last year, only one tropical storm came ashore. But in 2005 -- a La Nina year -- there were a record 27 storms, including Hurricane Katrina, which devastated New Orleans, much of the US Gulf Coast, AND “energy alley” in the Gulf of Mexico.
Labels: crude, crude oil, hurricanes, Iran
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