OIL: In case you missed this in my April 9 NEW$ & VIEW$:

Saudi Arabia’s oil minister, Ali Naimi, was quoted just before the market’s close [last Wednesday] as saying the kingdom was willing to work with other major oil producers to stabilize world oil markets and boost prices, which he expected would “improve in the near future.”

But he made clear that Saudi Arabia, other members of the Gulf Cooperation Council and OPEC would not bear the burden of stabilizing markets alone. (Platts)

This is major stuff. Less than 2 months before the June 5 OPEC meeting, Saudi Arabia is inviting other producers to “work with them to stabilize world oil markets and boost prices”. This morning, I found Ali Naimi’s actual quote in an April 7 Bloomberg piece:

Saudi Arabia, which increased oil production to 10.3 million barrels a day in March, is ready to bring stability to prices, said oil minister Ali al-Naimi.

The kingdom, which led the Organization of Petroleum Exporting Countries last year in declining to cut output, will keep producing around 10 million in the near future, Naimi said Tuesday at a conference in Riyadh. The March figure is the highest in the Joint Organisations Data Initiative database since 2002.

The group will not cut output without cooperation from non- OPEC producers, Naimi said. (…)

“Market fluctuations are inevitable,” Naimi said. “The challenge is to restore the supply-demand balance and reach price stability. This requires the cooperation of non-OPEC major producers, just as it did in the 1998-99 crisis.”

Oil prices will improve in the near future, he said. (…)

“Some non-OPEC major producing countries said they were unable or unwilling to participate in production cuts,” Naimi said. “For this reason, OPEC decided at its Nov. 27 meeting to maintain production levels and not to give up its market share in favor of others.”

What is he saying?

• Prices are where they are, not because we wanted it, but because “some non-OPEC major producing countries said they were unable or unwilling to participate in production cuts”.
• Saudi Arabia “will keep producing around 10 million in the near future”.
• But SA is “ready to bring stability to prices but will not cut output without cooperation from non-OPEC producers”.

In effect, the June 5 meeting is already under way and Big Daddy wants every “major non-OPEC producers” to know that if they don’t come to the table and “participate in production cuts”, the pain will continue for an indefinite time. This is a 2-month very-high-stakes poker game and the Saudis have placed their chips for everybody to see. Do they really mean business or are they bluffing?

Since the Nov. 27, 2014 meeting, Russia is in recession, Venezuela is bankrupt and the Middle-East is in an even worse chaos. U.S. production is about to peak but the production outlook for Iraq, Iran, Nigeria and Libya, just to name a few, is questionable and essentially subject to political/military factors which have little to do with oil economics.

Saudi Arabia’s situation has also changed as the kingdom now sees enemies encircling it. It has begun military interventions and must now deal with a potential nuclearisation of the Middle-East if the so-called “Iran deal” is ratified.

What will Russia do, this time?

To me, this opening at this time means that the Saudis want (need) higher prices. Ali Naimi saying that “oil prices will improve in the near future” is a major departure from the Saudi stance since November which always was to talk prices down.

  This Kissinger-Shultz op-ed is the most objective and realistic analysis of the Iran deal that I have seen:

The Iran Deal and Its Consequences By Henry Kissinger and George Shultz

(…) For 20 years, three presidents of both major parties proclaimed that an Iranian nuclear weapon was contrary to American and global interests—and that they were prepared to use force to prevent it. Yet negotiations that began 12 years ago as an international effort to prevent an Iranian capability to develop a nuclear arsenal are ending with an agreement that concedes this very capability, albeit short of its full capacity in the first 10 years.

Mixing shrewd diplomacy with open defiance of U.N. resolutions, Iran has gradually turned the negotiation on its head. Iran’s centrifuges have multiplied from about 100 at the beginning of the negotiation to almost 20,000 today. The threat of war now constrains the West more than Iran. While Iran treated the mere fact of its willingness to negotiate as a concession, the West has felt compelled to break every deadlock with a new proposal. In the process, the Iranian program has reached a point officially described as being within two to three months of building a nuclear weapon. Under the proposed agreement, for 10 years Iran will never be further than one year from a nuclear weapon and, after a decade, will be significantly closer.

(…) Still, the ultimate significance of the framework will depend on its verifiability and enforceability.

Negotiating the final agreement will be extremely challenging. For one thing, no official text has yet been published. The so-called framework represents a unilateral American interpretation. Some of its clauses have been dismissed by the principal Iranian negotiator as “spin.” A joint EU-Iran statement differs in important respects, especially with regard to the lifting of sanctions and permitted research and development.

Comparable ambiguities apply to the one-year window for a presumed Iranian breakout. Emerging at a relatively late stage in the negotiation, this concept replaced the previous baseline—that Iran might be permitted a technical capacity compatible with a plausible civilian nuclear program. The new approach complicates verification and makes it more political because of the vagueness of the criteria.

Under the new approach, Iran permanently gives up none of its equipment, facilities or fissile product to achieve the proposed constraints. It only places them under temporary restriction and safeguard—amounting in many cases to a seal at the door of a depot or periodic visits by inspectors to declared sites. The physical magnitude of the effort is daunting. Is the International Atomic Energy Agency technically, and in terms of human resources, up to so complex and vast an assignment?

In a large country with multiple facilities and ample experience in nuclear concealment, violations will be inherently difficult to detect. Devising theoretical models of inspection is one thing. Enforcing compliance, week after week, despite competing international crises and domestic distractions, is another. Any report of a violation is likely to prompt debate over its significance—or even calls for new talks with Tehran to explore the issue. The experience of Iran’s work on a heavy-water reactor during the “interim agreement” period—when suspect activity was identified but played down in the interest of a positive negotiating atmosphere—is not encouraging.

Compounding the difficulty is the unlikelihood that breakout will be a clear-cut event. More likely it will occur, if it does, via the gradual accumulation of ambiguous evasions.

When inevitable disagreements arise over the scope and intrusiveness of inspections, on what criteria are we prepared to insist and up to what point? If evidence is imperfect, who bears the burden of proof? What process will be followed to resolve the matter swiftly?

The agreement’s primary enforcement mechanism, the threat of renewed sanctions, emphasizes a broad-based asymmetry, which provides Iran permanent relief from sanctions in exchange for temporary restraints on Iranian conduct. Undertaking the “snap-back” of sanctions is unlikely to be as clear or as automatic as the phrase implies. Iran is in a position to violate the agreement by executive decision. Restoring the most effective sanctions will require coordinated international action. In countries that had reluctantly joined in previous rounds, the demands of public and commercial opinion will militate against automatic or even prompt “snap-back.” If the follow-on process does not unambiguously define the term, an attempt to reimpose sanctions risks primarily isolating America, not Iran.

The gradual expiration of the framework agreement, beginning in a decade, will enable Iran to become a significant nuclear, industrial and military power after that time—in the scope and sophistication of its nuclear program and its latent capacity to weaponize at a time of its choosing. Limits on Iran’s research and development have not been publicly disclosed (or perhaps agreed). Therefore Iran will be in a position to bolster its advanced nuclear technology during the period of the agreement and rapidly deploy more advanced centrifuges—of at least five times the capacity of the current model—after the agreement expires or is broken. (…)

Even when these issues are resolved, another set of problems emerges because the negotiating process has created its own realities. The interim agreement accepted Iranian enrichment; the new agreement makes it an integral part of the architecture. For the U.S., a decade-long restriction on Iran’s nuclear capacity is a possibly hopeful interlude. For Iran’s neighbors—who perceive their imperatives in terms of millennial rivalries—it is a dangerous prelude to an even more dangerous permanent fact of life. Some of the chief actors in the Middle East are likely to view the U.S. as willing to concede a nuclear military capability to the country they consider their principal threat. Several will insist on at least an equivalent capability. Saudi Arabia has signaled that it will enter the lists; others are likely to follow. In that sense, the implications of the negotiation are irreversible.

If the Middle East is “proliferated” and becomes host to a plethora of nuclear-threshold states, several in mortal rivalry with each other, on what concept of nuclear deterrence or strategic stability will international security be based? Traditional theories of deterrence assumed a series of bilateral equations. Do we now envision an interlocking series of rivalries, with each new nuclear program counterbalancing others in the region?

Previous thinking on nuclear strategy also assumed the existence of stable state actors. Among the original nuclear powers, geographic distances and the relatively large size of programs combined with moral revulsion to make surprise attack all but inconceivable. How will these doctrines translate into a region where sponsorship of nonstate proxies is common, the state structure is under assault, and death on behalf of jihad is a kind of fulfillment?

Some have suggested the U.S. can dissuade Iran’s neighbors from developing individual deterrent capacities by extending an American nuclear umbrella to them. But how will these guarantees be defined? What factors will govern their implementation? Are the guarantees extended against the use of nuclear weapons—or against any military attack, conventional or nuclear? Is it the domination by Iran that we oppose or the method for achieving it? What if nuclear weapons are employed as psychological blackmail? And how will such guarantees be expressed, or reconciled with public opinion and constitutional practices?

For some, the greatest value in an agreement lies in the prospect of an end, or at least a moderation, of Iran’s 3½ decades of militant hostility to the West and established international institutions, and an opportunity to draw Iran into an effort to stabilize the Middle East. (…)

But partnership in what task? Cooperation is not an exercise in good feeling; it presupposes congruent definitions of stability. There exists no current evidence that Iran and the U.S. are remotely near such an understanding. Even while combating common enemies, such as ISIS, Iran has declined to embrace common objectives. Iran’s representatives (including its Supreme Leader) continue to profess a revolutionary anti-Western concept of international order; domestically, some senior Iranians describe nuclear negotiations as a form of jihad by other means.

The final stages of the nuclear talks have coincided with Iran’s intensified efforts to expand and entrench its power in neighboring states. Iranian or Iranian client forces are now the pre-eminent military or political element in multiple Arab countries, operating beyond the control of national authorities. With the recent addition of Yemen as a battlefield, Tehran occupies positions along all of the Middle East’s strategic waterways and encircles archrival Saudi Arabia, an American ally. Unless political restraint is linked to nuclear restraint, an agreement freeing Iran from sanctions risks empowering Iran’s hegemonic efforts.

Some have argued that these concerns are secondary, since the nuclear deal is a way station toward the eventual domestic transformation of Iran. But what gives us the confidence that we will prove more astute at predicting Iran’s domestic course than Vietnam’s, Afghanistan’s, Iraq’s, Syria’s, Egypt’s or Libya’s?

Absent the linkage between nuclear and political restraint, America’s traditional allies will conclude that the U.S. has traded temporary nuclear cooperation for acquiescence to Iranian hegemony. They will increasingly look to create their own nuclear balances and, if necessary, call in other powers to sustain their integrity. Does America still hope to arrest the region’s trends toward sectarian upheaval, state collapse and the disequilibrium of power tilting toward Tehran, or do we now accept this as an irremediable aspect of the regional balance?

(…) Beyond stability, it is in America’s strategic interest to prevent the outbreak of nuclear war and its catastrophic consequences. Nuclear arms must not be permitted to turn into conventional weapons. The passions of the region allied with weapons of mass destruction may impel deepening American involvement.

If the world is to be spared even worse turmoil, the U.S. must develop a strategic doctrine for the region. Stability requires an active American role. For Iran to be a valuable member of the international community, the prerequisite is that it accepts restraint on its ability to destabilize the Middle East and challenge the broader international order.

Until clarity on an American strategic political concept is reached, the projected nuclear agreement will reinforce, not resolve, the world’s challenges in the region. Rather than enabling American disengagement from the Middle East, the nuclear framework is more likely to necessitate deepening involvement there—on complex new terms. History will not do our work for us; it helps only those who seek to help themselves.

This is America:

America’s Victory at Appomattox 

(…) What remains consistent as we mark the 150th anniversary of Gen. Robert E. Lee’s surrender is the iconic scene at Appomattox Court House on April 9, 1865. After 11 months of intense fighting since their first encounter on the battlefield, the victorious Union commander, Gen. Ulysses S. Grant, met the commander of the Army of Northern Virginia, Lee, in the parlor of the McLean House.

Lee’s troops were paroled, meaning they could return home, and were given rations from Union wagons. Those who owned horses could keep them, and officers could retain their side-arms. Grant’s magnanimity was nearly unheard of in a civil war, and Winston Churchill later wrote that it “stands high in the story of the United States.” (…)

It should be clear, however, that what happened at Appomattox determined the survival of the United States and made possible the freedom it promised to those who were denied it. Few events in history possess existential importance to the success of the American experiment, and none surpasses this one in magnitude.

Mort Kunstler, renowned as “the premier historical artist in America”, painted Salute of Honor depicting the poignant Appomattox scene with these comments:

They faced each other in two long straight lines – just as they had so many times before on so many bloody fields of fire. This time was different. Three days earlier, General Robert E. Lee had surrendered the skeletal remnants of his hard-fighting Army of Northern Virginia to General Ulysses S. Grant in farmer Wilmer McLean’s parlor. Now it was time for the Sons of the South to lay down their arms and give up their bloodied battle flags. As enemies, these men in blue and gray had faced each other at Petersburg and Cold Harbor, at Gettysburg and Chancellorsville, at Fredericksburg and Antietam, at Second Manassas and Malvern Hill. Now they again stood in great ranks opposite each other – one now the victor, the other now the vanquished.

Placed in command of receiving the Southern surrender was Brigadier General Joshua Lawrence Chamberlain, a Northern war hero who bore four battle wounds inflicted by these men in gray and butternut now assembled before him. Absent in Chamberlain, however, was any animosity toward these former foes; present instead was a sense of respect for fellow countrymen who had given their all in the grip of war.

At Chamberlain’s order, there was no jeering. No beating of drums, no chorus of cheers nor other unseemly celebration in the face of a fallen foe. “Before us in proud humiliation,” Chamberlain would later recall, “stood the embodiment of manhood: men whom neither toils and sufferings, nor the fact of death, nor disaster, nor hopelessness could bend from their resolve; standing before us now, thin, worn, and famished, but erect, and with eyes looking level into ours, waking memories that bound us together as no other bond. Was not such manhood to be welcomed back into a Union so tested and assured?”

At Chamberlain’s command, the Northern troops receiving the surrender shifted their weapons to “carry arms” – a soldier’s salute, delivered in respect to the defeated Southerners standing before them. Confederate General John B. Gordon, immediately recognized this remarkable, generous gesture offered by fellow Americans – and responded with a like salute. Honor answering honor. Then it was over. And a new day had begun – built on this salute of honor at Appomattox. Former foes both North and South – in mutual respect and mutual toleration – now faced the future together. As Americans all.

This is also America!

The Plan to Speed Up Baseball The game, its fans aging and ratings dropping, is on a mission

Apple Watch is on pre-order today and the weekly roundup in tech and retail by Leah Grace