Keep Your Eye on Middle East Wild Card

Protests in EgyptBy Greg Hunter’s USAWatchdog.com

Just a few weeks ago, an uprising toppled a little known Tunisian leader (President Zine al-Abidine Ben Ali.)  Tunisia is due west of Egypt, separated only by Libya.  About the only thing that seemed newsworthy was the family reportedly took flight with a ton and a half of gold.  Then, Egypt exploded and the specter of revolution across the entire region came into focus.  There have been non-stop rioting, protests and some people are even setting themselves on fire in a wave of anti-government rage. 

Thousands of prisoners have been sprung from jail as the situation spirals into possible lawlessness.  The Telegraph reports, “Inmates escaped from at least four jails across Egypt, including suspected Muslim extremists and members of the Muslim Brotherhood, an Islamist.  In one jailbreak at the Abu Zaabal prison on the outskirts of Cairo locals told The Daily Telegraph that 18 people had been killed after gangs of gunmen fought a six-hour battle with guards to free jailed associates.”  (Click here to read the complete Telegraph story.)

There will be more killing and bloodshed before this is over.  There is no guarantee the Egyptian government will fall; but if it does, there could be consequences that will be felt in the U.S.  For one thing, the Suez Canal goes through Egypt.  This important channel is big enough for aircraft carries and oil tankers.  Oil shipments could be stopped or slowed through this vital shipping route.  Oil prices would go higher, and people driving in Kansas could see price increases in a matter of days. 

On a wider and more ominous note, this revolution could spread to other oil producers in the region.  The biggest and most important to the world is Saudi Arabia.  It is the largest petroleum exporter on the planet.  If Saudi Arabia falls, oil prices would spike, and I am not going to even guess how high.  Undoubtedly, the world financial system would crash and the world could twist into complete disorder.  Here’s how Zerohedge.com is reporting the situation, “While the biggest threat to the Middle East region is the possibility that the population of Saudi Arabia may try to imitate what has been happening in the area, thereby bringing total chaos to the established regional geopolitical and more importantly, energy, structure, the first protests in the Saudi Arabia city of Jeddah are already in the books. . . . That this is even occurring in a state where the average wealth is orders of magnitude greater than in Egypt is remarkable.”  (Click here to read the complete Zerohedge.com story with protest video.)  If Saudi Arabia collapses, it would not be long before the entire Arabian Peninsula would be destabilized. 

The Arabian Peninsula is in the heart of not only the richest oil region in the world, but flanked by two of the narrowest shipping choke points on the planet.  On the east of the Peninsula is the famous Straits of Hormuz.  It is a little less than 30 miles wide at the narrowest point.  On the west side of the Peninsula is a lesser known strait called Bab el-Mandeb, or the “Gate of Tears.”  That is about 20 miles wide at the narrowest passage.   Please study the map below:

There is no telling how far this could spin out of control, but it looks like we are a lot closer to the beginning than we are to the end of this crisis.  Please keep a close eye on this story because it could affect your family and finances.

Comments
  1. Alessandro Machi

    Did Barack Obama spend too much time on his pomp and circumstance state of the union address and not enough time about what was about to happen in the middle east?

    I knew something was up with the tone of his speech and that is why I wrote this… http://swarmthebanks.blogspot.com/2011/01/barack-obamas-2011-state-of-union.html

    Thanks for the heads up on gas prices and the Suez Canal, Greg. Unfortunately, what is an economic and civil discord issue for the planet may also be viewed as an opportunity to make money on petroleum futures.

    • Greg

      Thank you Alessandro.
      Greg

  2. Glenn

    You’re absolutely right Greg. This warrants complete attention, not just in the Middle East but worldwide. Washington’s hands may be tied with Eygpt, but it this chaos spreads to Saudi Arabia, the U.S. will most definately take action. Maybe they will stage another so called terrorist attack on U.S. soil. Israel too could, and very well, play a vital part in a very unstable region of the world. Worse case scenario, WW III. After all, how else is the U.S. going to alleviate it’s fiscal problems back home?

    • Greg

      Glenn and Tom H,
      Both of you guys are on target with your comments.
      Greg

  3. Tom H

    And the #1 culprit in all of this, Bennie Bernanke and his printing press. See what happens when you decide to export inflation to the entire world! Great job Bennie, you’re a genius. But don’t worry everyone, Bennie has got it under control, he could just raise interest rates and stop all of this in its tracks, right?

  4. Sean S

    Your concerns are well founded.

    I will not be surprised to ultimately see, in time, arising out of this chaos another Islamic dictatorship State which is generally anti – West and of course anti- Israel. The Islamic influence will now be unleashed in full force to take advantage of every opportunity to grab power.

    I think much will depend now on what various elements of the armed forces decide to do from here on. Ultimately they will probably not all remain supportive of Hosni Mubarak and, in that event, his days are seemingly numbered.

    I think that those Western Governments that believe that some kind of representative democracy will result from this turmoil, and from the removal of the present regime (such as it is), or that some kind of “friendly” moderate Government will arise, are kidding themselves.

    Possibly this is an overly simplistic view especially given the current fluidity of events. I hope I am wrong but some pointers suggest otherwise. Out of all of this I do not see any plus for stability in the Middle East but, rather, the opposite.

    • Greg

      Sean S,
      This is the wild card I was hoping we would not see for awile but fate does not wait.
      Greg

  5. Mark

    The end of OPEC?

    • Greg

      Mark,
      Good question.
      Greg

  6. Sam

    Dear Greg,

    Thank you for the post and analysis.

    Unfortunately, your peers in the media don’t see it that way. They see it as “yearning” for “freedom” and “democracy.”

    Unfortunately, that runs counter to the history of rebellions and revolutions. Because the real reason has always been economics.

    In both Tunisia and Egypt, the underlying cause is the price of food. Last year, the price of food worldwide went up due mainly to poor harvests caused by bad weather in several major food-producing countries. (Russia, under Putin, stated that food would stay in that country because of the dismal harvest.) The poorest people could not afford to feed themselves amid rising prices, and so they had the following choices: rebel, or starve. (One can die by both, but a government bullet is far quicker than dying of hunger.)

    What does that mean here? For one, the Suez canal can close, shutting off oil shipments via supertankers. Whoops, we’ve got higher prices at that pump! For another, it can spread. According to Zerohedge.com, rebellion under the guise of radical Islam is now spreading to Saudi Arabia, a major OIL SUPPLIER to this country. Whoops, looks like prices are now WAY higher! Those who have lost their jobs, who are forced to work temp/part time, or full-time at lower wages, will be hit first, hardest. You’ll see them on the news, talking of their plight. The more callous of you will say, “Be green, take a bus, walk, or ride a bike.” Uh, huh. Try doing that when the bus service is not the best, when you live in a bad area, or when the weather is ROTTEN.

    However, higher fuel prices will not only affect those on the “lower end.” Food has to be shipped, either from producer to wholesaler, or producer to seller. Shipped in trucks that use gas or diesel, or trains that use diesel. And, sellers will not send off goods with a smile and absorb the higher costs. No, they’ll pass it off to their customer, who in turn will pass it along to their customer; eventually it will come down to the final consumer. Very soon, even the meanest fast food joint will look like fine dining by way of the prices they will charge.

    “Oh,” you say, “the U.S. produces oil.” So it does. And, thanks to the presidents you chose (Carter, Clinton, and the usurper), as well as Democrat congresses, and the U.S. really does not produce all that much oil. The U.S. also is limited in its refineries, all thanks to environmentalists (who have nothing better to do, because honest work is too good for them). Hence, it will be YEARS that the U.S. can catch up. (And, don’t hit me with that Marxist bravo sierra that “we’re running out of oil,” geologists have found that fields that were “pumped dry” have replenished themselves!).

    The government can only lie so far with its Consumer Price Index. The people have a way of finding out, they have eyes, especially when they shop ($3 for a small bag of crunchy Cheetos yesterday at Safeway, no way!).

    Higher food prices, higher fuel prices, a youth who cannot find summer jobs or jobs when they graduate high school/college. Add to this a possible failure of the financial markets in June, and we’ve got an explosive mix here.

    • Greg

      Sam,
      Thank you for your perspective and analysis.
      Greg

    • Alessandro Machi

      Sam, if George Bush has spent one dollar on renewable energy for every dollar he spent on the war on terrorism, we’d be in much better shape right now. Hybrid’s are not the answer, nor is being addicted to oil from the middle east.

  7. Art Barnes

    Greg, Egypt has a food for oil program with the US. Egypt experienced peak oil about 10 years ago and production has not increased, but the population has (90 million now). Rising oil prices means higher food cost due to Egypt’s food imports from the US (which is sustantial), resulting in inflation on the streets for food in an allready impoverished nation. Bernanke’s “perputual easing” is showing its ugly head in Egypt – next I predict it in the US. Get ready America, here it comes.

    As to your comment that …”fate does not wait” I agree, and it won’t wait here in America either. Things are lining up, you have to be real stupid not to see it coming. Get your food and fuel stocked up your going to need it!

    From the Western Front, A.B.

  8. K. Potter

    And what are we doing as a nation to end our dependence on oil?

  9. Brent

    Brent crude just surpassed $100 for the first time since October 2008. Can you imagine if this Suiz canal gets closed in Egypt. That will hit everyone hard including the USA.

    • Greg

      Brent,
      Thank you. It could goe straight up for days.
      Greg

  10. Mitch Bupp

    I don’t know what will happen but if history is any example the US will be on the short end of the stick once again. We supported the dictator Hosni Mubarak for 30 years … the question is if the population will embrace radical shia law or remian secular? I see a hardcore Islamic theocracy just because that is a natural reaction to religious supression of the majority. If you haven’t look at the Iraqi constutition …it reads that Iraq is an Islamic country and no law can be against Islamic Law ….so much for freedom when we leave …..

    There is no doubt that oil prices will rise and gas in the world. Something we can not afford!

  11. Greg Delapaix

    For those who say “WWIII- how else can the U.S. alleviate its fiscal problems back home?”

    This time around, WWIII will not alleviate the U.S. fiscal problem. We no longer have the means to produce anything afterward, nor the political clout to force others into our control.

    There is no way around the impending doom of the American empire- it is not based on truth or justice, and it won’t be a happy ending.

    The last ‘state of the union’ address of the U.S. president should make clear he has no handle on reality.

  12. Susan

    Both my husband and myself are National Guard Members and my husband came back from drill saying a unit in another state got activated to Egypt as peace keeping. Lets push our military very very thin, cut military strength like they want to and see how vulnerable we are to attack, especially what Glenn spoke of above.

    • Greg

      Susan,
      Thank you for the comment and your service to the America.
      Greg

  13. kc ramone

    This is so reminiscent of Iran. When the Shah was deposed and it looked like there was a real possibility of democracy, in swooped the Ayatollah Khomeni who had been patiently living in France, awaiting his move. Nobody had anticipated this. Undoubtedly and unfortunately, with Mubarak being deposed, a fundamentalist gov’t will set up business. And we now have the domino effect happening in Jordan, Yemen, etc. Obama’s emasculating of America’s hegemony is most definitely a factor in these events. Obama will be known as the president who lost Egypt and did nothing when the Iranian elections had people in the street begging his help. He kept quiet to placate the mullahs. The floodgates are open and realistically, we are facing a fundamentalst islamic empire from Morocco to the far east.

  14. Melvin

    Egypt burns while Obama parties with Axlerod.

  15. Phd doom and boom

    What is happening in the world now and unrest is reaching epidemic proportions, and it is the reaction of those who have not been treated in accordance with their rights. Sometimes regretfully it is not until matters reach an explosive level and results in violent demonstrations, that the authorities are forced to acknowledge the will of the people. If true democracy existed without corrupt practices, changes could peacefully take place through the ballot box. Using brutal force against the people will not solve the problems, and at best only puts off the inevitable. What you can see is the outworking of the new energies, that are shaking the foundations of anything that lacks the Light. It is to be hoped that in the Western countries a peaceful take over is allowed to take place. Also that new political appointments, are based upon the credentials of those who are energized with the desire to honestly lead the people into a new era of peace. Opec should be broken up lol

  16. Keith

    This is Jimmy Carter’s 2nd term.

    • Alessandro Machi

      I’ve heard it’s George Bush’s third term as well. But, should we be surprised, since Barack Obama has managed to woo Wall Street and community activists to do his bidding.

  17. Troy

    Hurry,Hurry, step right up for a ride upon the ‘Revolution Carrousel’; where it stops-autocracy, democracy, theocracy-nobody knows. Decades without a National energy policy and now the rain has begun to fall Noah; a little late now for that financial/military umbrella.

    Cannot imagine how the pundits at CNBC will spin this toa positive for the equity markets, Kudlow will be priceless, Cramer with a volume of eleven.

    It makes my head hurt…

  18. nm

    If as people are saying here, the rising price of food is behind the riots in Egypt and Tunisia, why aren’t you seeing similar riots in sub-saharan African countries, which are poorer than both Egypt and Tunisia?

    Many countries in sub-saharan Africa have a much more dangerous al-qaeda presence, but it’s not mentioned much in the media.

    The first one is Somalia. A very dangerous and forgotten place filled with al-qaeda fighters from Chechnya, Saudi Arabia and yes, Egypt. This is the new Afghanistan, but no one is talking about it much.

    Then, move to Sudan (an oil producing country) where the south just voted to secede from the north, but the bulk of the oil is in the south. There will be fighting over the oil reserves in the south after this secession move.

    They are currently riots in Jos, Nigeria between muslims and christians (Nigeria is another major oil producing country). Trouble, trouble.

    However, you have other countries with growing al qaeda threats like Mauritania, Niger, Chad and Mali. What America doesn’t realize is that these sub-saharan African countries will become the new safe havens for rising Islamic extremism.

    Everyone is focused on the Middle East, but I see a hidden and much more dangerous problem in sub-saharan Africa.

  19. Bob

    Good for the people of Egypt, hope things work out for them. Bring the troops home from those useless wars. People are worried about the cost of oil. How much oil did we wast in those useless wars, how much debt did we put on are back for ten years of of useless wars. The lies of weapons of mass destruction ,the oil will pay for the war. How many of are blown up kids from these useless wars, will need care for the next fifty years. The people in Egypt can do what they want, we can’t even run this country. Also why Should we worry about Israel they can stop spending money on national health care and we can stop sending them are inflated dollars. Bring the troops home, stop the homeland security airport BS, stop the war on drugs and vote all the war supporters out of office.

  20. Mohammed/Riyadh

    So all you guys care about is oil supply?

    This is outrageous. How about our freedom?

    You know your western governments are supporting these tyrants to suppress their people because it gives them leverage over the dictators. And you cry foul when a freedom fighter takes revenge!!!

    • Greg

      Mohammed,
      Revenge is what we are afraid of.
      Greg

  21. Amman

    It is enough to ponder about Egypt.

    The West might be taken to the brink by the Muslim Youth.

  22. Art Barnes

    Every time I read the Responses to this blog I am amazed at the insight of many Americans, they are a fresh wind to a drifting sailor.

    America is on its own verge of a corrupt police state, the back room bail outs, the over taxation, the hidden fees, permits, and red tape choking your small business to death, not to mention the banksters screwing 3,000 Americans out of their home each day.

    I just hope that if crap hits the fan here we are as brave as the common Egytians and will take it to the streets in non-violent protest – if it does happen don’t look for your police, government employees, the rich landowners, the bankers, and the white shoe boys, upper class, etc. to be next to you, for as usual, they will sit this one out. Remember during the American revolution 1/3 of the people were loyal bastards to King George – The upper crust always likes a free ride as they never bought into the old saying there is no such thing as a free lunch.

    In the meantime the market rallies, go figure.

  23. luke

    If the US doesn’t support the current president of Egypt its likely this opposition leader will be anti-zionist. If the US supports the current president and he maintains power the likely result is going to be targeted attacks at Americans or US troops with the possiblity of increased Terror Attacks.

    I do not think the US can absorb an anti american ruler in Egypt. Because of this reason I believe the US will do everything to keep the current ruler in power. Like Greg said the domino effect could be check-mate for the U.S.

  24. Marcel

    Look’s like the perfect storm is brewing for a major war between infidel Israel and her radicalized neighbors.
    With America’s dying influence in the region and Egypt’s Muslim Brotherhood planning destabilization in the region Iran seems to be ahead in the final lap.

    Already today Hamas in Gaza fired a number of Grad rockets into Israeli towns.With Hizbollah calling the shots for Iran in Lebanon and 40,00 missiles aimed at Israel it won’t take much to set of the scenario which the ancient’s foretold of in the Bible.
    Armageddon approaches !

  25. Jeff

    Obama gave a speech in Egypt in 2009 that sounded like a green light to those non in power in Tunisia, Egypt and the whole Middle East that he had their back if they wanted “freedom”! Now Obama sits on the fence not knowing which way to toss his support…………..he wants it both ways while a possible blowup in the whole region starts that he does not have a clue! I guess like in december he will have to call Bill Clinton to get him out of another mess………………………..how sad!

    I guess we should get ready for $6.00 a gallon in gas and not the $4.00 a gallon the CEO of Chevron said we would see this year. Talk about a recovery?

  26. T Bonham

    I have heard some say that if OPEC collapses OIl prices will plumett, but I beleive the opposite will be true intially as OPEC members are kept in line because of the other members. What’s to keep Iran from forming a coalition with Chavez and jacking prices up? or individual countries charging market prices, as China bids the price up to stockpile? Too fluid to say one way or another but we are in for dark days….ditto of stocking food, fuel, bullets and pm’s!

  27. PHC

    An acute and interesting viewpoint on Egypt and the Middle East Domino game: http://www.voltairenet.org/article168319.html

  28. Bob

    PHC that was a good article. I read a article on Veterans Today that said Israel has sent planes load with riot gear to Egypt, could be bring in snipers.

  29. Jan

    I have the greatest admiration for the military of Egypt for not turning on the citizens as so often happens in these circumstances. I hope the Army holds firm and does not allow the radicals to take over their country.

    While most Americans do not know the life circumstances of the people of the Middle East, I think we all want them to have freedom to live their lives, take care of their families and enjoy a good life.

  30. dean

    i think it is ending rather than beginning, but that is just my opinion. I just see a few protests, not an uprising that will dramatically change anything in the region. unless they want to be more economically depressed than they are now, the protests will soon end.

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