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Of course I loathe Assad. And of course I despise the Obamans for that phony red line and the subsequent retreat-and-bogus-Russian-deal. But just carrying out vengeance against Assad isnt good enough. It fails to address the central problem of our time: the global anti-American alliance.

There is no Syria any more, and the enemy forces on the Middle Eastern battlefield come from various jihadi groups, and three regimes: Moscow, Tehran, and Damascus. We have to defeat them all, and other members of the enemy alliance, including Cuba and North Korea. Nikki Haley has it right: The truth is that Assad, Russia and Iran have no interest in peace.

Indeed, they are waging war, and the principal force driving that war is not Assad, but Iranian Supreme Leader Ali Khamenei. Khameneis killers have been alongside Assads from the very beginning, as the survival of the Syrian dictator is crucial to Iranian ambitions and quite likely also the survival of the Islamic Republic itself. Listen to Defense Secretary James Mattis a few days ago (from Reuters):

At the time when I spoke about Iran I was a commander of US central command and that (Iran) was the primary exporter of terrorism, frankly, it was the primary state sponsor of terrorism and it continues that kind of behavior today, Mattis said.

True, and Mattis characteristically strong language points the way to the best American action in the region, namely bringing down the Tehran regime. Lashing out at Assad isnt nearly good enough. After all, what strategic objective would we accomplish by smashing, even removing, Assad? The Iranian and Russian fighters would still be there, as would the Islamist forces. The demands on our military would dramatically expand. We do not want to occupy a significant land mass in what used to be called Syria, nor do we seem to have sorted out what we want to do with the Turks and the Kurds.

Punishing Assad would be satisfying, but weve got a big war to win. Its smarter and more effective to go after the regime in Tehran. Not militarily, but rather supporting the tens of millions of Iranians who detest the Khamenei regime. Call it political warfare, or subversion, or democratic revolution. It worked against the Soviet Empire, and there are good reasons to believe it would work in Iran as well. Most Iranians, suffering under the failed regime, want a freely chosen government that will address their problems instead of dispatching their husbands and sons sent to the battlefield.

Read more here:
The Real War in 'Syria' and the Strategy for Long-Term Victory - PJ Media

Oil is ticking higher today, as the market continues to bet on the prospect of market tightening. As Nonfarm payrolls beckon tomorrow, hark, here are five things to consider in oil markets today.

1) While total global floating storage is ticking lower, it is still holding above 100 million barrels. Two areas where we are seeing it gradually drawn down is off Singapore / Malaysia, and in the Persian Gulf. After being over 30 million barrels as recently as October, Iranian floating storage has been siphoned to supplement exports underscoring the Persian Gulf states struggles to boost domestic production.

This week we have seen Iranian barrels drop to 5 million barrels, while barrels offshore of United Arab Emirates have halved in the last week, dropping to just under 10 million barrels.

2) We have seen a distinct change in appetite from China, as March deliveries of medium and heavy crude have increased considerably, while light imports have dropped off. As imports from the Middle East have dropped by half a million barrels per day, arrivals from West Africa have reached the highest on our records, close to 1.5mn bpd.

This record volume has been led by a rebound in Angolan arrivals, but also by rising imports from Nigeria, Equatorial Guinea, Gabon and Ghana. Over 70 percent of this crude is medium or heavy.

3) While on the topic of China, there have been a number of developments this week. One is that the Chinese government has granted import quotas to two independent refiners to Henan Fengli Petrochemical Company (for just over 16 million barrels) and to Shandong Zhonghai Chemical Group Co (for 13.6mn bbls), which will serve to boost import demand in the coming months.

Another is that it has issued a second batch of 2017 product export quotas, but has slashed them to three of the countrys leading oil companies: Sinopec, CNOOC and Sinochem Quanzhou. The first batch of product export quotas for the three companies were ~70 million barrels. The second batch is considerably lower at ~28 million barrels. What is peculiar, however, is that PetroChina has not received a quota in this second batch, after receiving a ~32 million barrel allocation in the first round. The total product export quota last year was ~360 million barrels.

4) Saudi Arabias net foreign reserves have now fallen by over 30 percent from their peak of $737 billion in 2014 to just over $500 billion. As the kingdom tries to strike a balance betwixt growing its economy but shifting away its reliance on oil, its short-term tactic is to use draw on its reserves to plug its budget deficit.

Net foreign assets fell by an average of $6.5 billion each month of last year. If this pace continued, Saudi Arabia would run out of assets in six and a half years.

5) Not only is Saudi Arabia drawing down its foreign assets, but it is also pulling oil from its inventories. After peaking at 329 million barrels in October 2015, Saudis oil inventories have now dropped to just under 262mn bbls having experienced the biggest monthly drop in a year for January with a 10.66mn bbl draw.

As Saudi walks the tightrope of trying to comply with the OPEC production deal as well as boost its revenues amid a lower oil price environment, it is drawing down storage to boost its coffers.

Originally posted here:
Market Currents: Floating storage holding up, despite Iran drop - FuelFix (blog)

When investing in oil, it helps to have a healthy dose of skepticism when it comes to looking at the data. Take Iran for instance. After freeing itself of onerous international sanctions, Iran has returned fully to the oil market.

Iranian oil production increased from an average of 2.8M bpd to 3.5M bpd, an increase of over 25% from 2015 to 2016. Once freed of international sanctions, 2016 output showed a healthy ramp in "oil production" from Q1 to Q4, with sequential quarterly increases (OPEC Monthly Oil Market Report 03/2017)

Iran (tb/d)

2015

2016

Q1 2016

Q2 2016

Q3 2016

Q4 2016

Production

2,838

3,502

3,096

3,539

3,646

3,725

The robustness of Iran's production was such that as OPEC settled into negotiating production cuts in Vienna last year, Iran was adamant that it be granted a higher production quota after emerging from years of sanctions. OPEC subsequently relented, and allowed Iran to increase production to 3.8M barrels per day. Iran had originally argued for a 4M bpd cap, but the compromise was politically palatable for Iran's leaders and OPEC.

As we're now receiving full year data, a clearer picture is emerging of Iran's actual production capability. We're often bemused when reality pulls back the curtain and what you thought may have been happening was actually happening. Given the years of underinvestment in Iranian oil fields, we believed it was unlikely Iran was able to increase and sustain production at the Q3/Q4 levels of over +3.7M bpd. Even secondary sources in OPEC's March MOMR reported that Iran produced 3.778M bpd in January and 3.814M bpd in February in Q1 of 2017. Although some increase was inevitable given the lifting of economic sanctions, it was much more likely that part of Iran's oil "production" was really oil exports coming from offshore/onshore storage.

In a recent report by Energy Aspects, the firm included a chart that shows Iranian floating condensate levels. Notice anything?

Coinciding with the rise in Q3/Q4 "production", offshore inventories fell considerably. Today Reuters reported the following

"Prior to the lifting of sanctions, Iran stored unsold oil on ships, which peaked in 2015 at 40 million barrels on around 25 tankers. The country has up to 60 oil tankers in its fleet.

Iran's drawdown of floating storage gathered pace in September. By the start of 2017, Iran still held an estimated 16 million barrels of oil on ships. Since then, they have emptied."

We believe this explains in part Iran's statement last month that if OPEC agreed to extend the cuts in its May meeting, then Iran would agree to hold production at 3.8M bpd. This is essentially a "free" concession as Iran has little ability to actually increase production even if it wanted to. The most likely explanation for the recent increase in "production" is that offshore destocking is being misinterpreted as oil coming from incremental production.

As we've been wrapping up our quarter and reexaming the underlying data, it's also becoming clear that much of what the world attributes to production has really been inventory destocking by national oil companies and traders. In fact, the dearth of investments these past few years will likely lead to a reduction of overall Non-US/Non-OPEC production. We'll be following-up the next few weeks with additional articles addressing and updating our larger oil thesis, but for now, all signs continue pointing to an eventual oil shortage by 2018 and much higher oil prices than today.

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Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Read more from the original source:
Iran's Oil Production: Fallacy Or Fallowed - Seeking Alpha

As someone characterized as part of the Iran Deal echo chamber in 2015, many might anticipate that I would oppose the sanctions against Iran presentlybeing developed in both the House of Representatives and the Senate. But, with modifications and in the right context, the bills being developed in theHouse and in the Senate may actually point the way for the kind of approach to sanctions against Iran that preserves and advances the common cause ofJPOCA proponents and skeptics alike.

Though sometimes lost in the public debates of 2015, the United States neither gave away all of its sanctions leverage over Iran in the JCPOA nor did itlose the right and the ability to impose targeted measures against Iran for actions incompatible with the JCPOA or outside its aegis. Under the JCPOA,what was agreed is that we would exchange nuclear relief for sanctions relief, offering Iran the promise of some economic renewal and securing for theUnited States the relief of Iran being unable to produce a nuclear weapon undetected and in less than a year.

Recognizing the very real threat such a development would pose, the House and Senate bills now under consideration would largely preserve the Obama-era approach. Modifications to the bills are necessary, particularly the Senate bills sweeping, mandatory sanctions on activities with Iran that pose a riskof contributing to Irans missile program, its mandatory terrorism designation of the IRGC (which adds nothing to the sanctions already in place against theIRGC but which military analysts fear could pave the way for retaliation against U.S. forces in the region), and language that could prejudice the ability ofthe U.S. to terminate in time some sanctions designations covered by the deal. These changes do need to be made to make the bill JCPOA compliant.But, by and large, both bills take the approach of imposing targeted sanctions for specific bad acts. They will engender caution in international businesses,but perhaps not outright fear. Iran will benefit economically, but lagging due to its policies.

What is missing now is a reaffirmation that the objective of the United States is not to undermine the JCPOA. Both the White House and the Congressshould state clearly, publicly, and in advance of any movement of this legislation that the JCPOA is working and merits protection and implementation. Thelegislation should reflect this specifically and in the construction of its waiver provisions. U.S. sanctions experts at the State and Treasury Departmentsshould be authorized to continue conversations with international businesses and banks about how to take advantage of JCPOA relief within the sanctionsregime, and to give assurances that so long as Iran fulfills its commitments the rug will not be jerked from under their feet. Absent this reaffirmation, itwould be a mistake to move the bills and certainly to sign them into law.

Irans hardliners are desperate for the United States to walk away from the JCPOA and looking to capitalize on U.S. missteps. Though they may profit inthe short term due to the control they exert over the Iranian economy (made possible in part because of the exigencies imposed by sanctions), economicopenness is seen by hardliners as a wedge through which political change may one day be pursued. Domestic Iranian efforts at reform are based in largepart on demonstrating success being attained via access to the international economy. Instead of granting perverse relief to our opponents in Tehran bydoubling down on a hostile policy, we should avoid chest thumping and grandstanding, including in sanctions form. For example, an aggressive sanctionsapproach to the IRGC that harms the JCPOA will do the IRGCs work for it. Tehran wont scrap the IRGC because it has been designated or targeted. TheUnited States cannot sanction it into oblivion. Its role can only be curtailed by showing that, particularly in the economic space, its involvement does moreharm than good. We should impose some limited, targeted sanctions to be sure; abandoning sanctions altogether for fear of offending the Iranians easesthe pressure on the system to resolve the contradictions in Irans own policies and government management. But, we must tailor our measures in a waythat makes the necessity of reform easier to argue and keeps the pressure on the IRGC and on Iran where it counts: at home.

We must proceed carefully, sensibly, and with a measure of respect for the needs and requirements of our adversary, our partners, and our own nationalsecurity. After all, if the JCPOA is damaged or lost, we lose something as well. Far from being something Iran should be grateful for getting, the JCPOA isdelivering value to the United States. For the first time in a generation, U.S., Israeli, and Gulf Arab national security thinkers can imagine a Middle East inwhich the near term risk is not Iranian nuclear weapons acquisition. In todays Middle East, that is a win worth preserving.

Richard Nephew was the lead sanctions expert for the U.S. team negotiating with Iran from 2013-15 and before thatserved as Director for Iran on the National Security Council staff. He is now a Fellow at the Center on Global EnergyPolicy at Columbia University.

Continue reading here:
Sanctioning Iran while preserving the JCPOA - The Hill (blog)

The Hindu

15 fishermen return from Iran The Hindu The 15 fishermen released from an Iranian prison landed at the Chennai airport on Thursday night. They were arrested on October 22 last on charges of entering Iranian waters without permission. They reached Chennai by an Emirates flight from Dubai. Iran ordeal over, 15 fishermen reach ChennaiThe New Indian Express all 4 news articles »

See original here:
15 fishermen return from Iran - The Hindu