Free Preview of Members-Only Content
To view the requested intelligence, you must be a Stratfor.com member.
1. Falling oil prices: The most important thing we are looking at is the drop in the price of oil. As oil approached $150, we had discussed how a decisive move above that price would redefine the global economy. We also said the Saudis didn’t want to see that happen. A major global recession was not in their interest. We therefore expected to see Saudi pressure on oil prices. The Saudis are heavy investors and depositors in financial institutions, hedge funds and private banks globally. They are the single most liquid player on the scene and certainly have the interest and means for managing global oil prices if they choose. Remember, there are lots of financial institutions that are not governed by U.S. or EU laws. Whatever the cause, at the time when oil prices were pushing the red zone, they came down to the level where real problems began — about $120 a barrel. Fine-tuning the price of oil is beyond anyone’s means. Certainly the Saudis would like it to stay about here. But there are lots of other forces at work. If prices go decisively below $120, we will be back where higher oil prices are not critical. If they move up again toward $150 and beyond, then the crisis is on full blast again. Watching oil prices this coming week will be like watching the world’s heart beating.
2. Nuclear negotiations with Iran: The deadline for Iran to provide an answer on stopping increases in uranium enrichment comes this weekend. The Iranians have made it clear that they will deliver their answer in their own time and way. No one really expected the Iranians to give in to an ultimatum on timing, so getting an answer this weekend is unlikely. But an answer will come shortly, and that answer will be extremely complex and ambiguous. It will be enough for the Europeans, Russians and Chinese to say that major progress has been made, but far from enough to satisfy the Americans. The United States has created a situation where the Iranians win if they simply confuse the issue. But at root, our analysis is still that the Iranians and Americans need to deal with each other. So there will be game playing on the front page, but the real story will be whatever quiet diplomacy is taking place. The Bush administration is trapped in this by high oil prices. Attacking Iran will surge oil prices into the stratosphere, and that will trigger an economic crisis. So the Iranians feel pretty secure — but not so secure that they want to face the next administration (they remember their miscalculation on Reagan versus Carter). So let’s ignore the headlines and focus on the little hints that will emerge next week.
| Stratfor Members, please log in at the top left hand corner |
