Mostly: Classical

[Frank Pembleton]

from Andy's blog:
http://www.bmocm.com/publications/fxcom/busch/

Iran's Energy Crisis: The NYT reports today that Iran is struggling to keep up with domestic demand for automobiles. "Some analysts say that if this acute imbalance between stagnant production and rising demand at home continues unchecked, Iran will have no oil left over to export within a decade. Its oil exports, totaling $47 billion last year, account for half the government’s revenue.....To curb demand, which has been driven in part by subsidies that keep the domestic pump price at a mere 35 cents a gallon, the government plans to begin rationing gasoline in March, a measure so unpopular, and potentially explosive, that rationing plans have been put off several times in the past."

The FT reports that Iran will be able to develop enough weapons-grade material for a nuclear bomb and there is little that can be done to prevent it, an internal European Union document has concluded. In an admission of the international community's failure to hold back Iran's nuclear ambitions, the document - compiled by the staff of Javier Solana, EU foreign policy chief - says the atomic programme has been delayed only by technical limitations rather than diplomatic pressure according to MNI. "Attempts to engage the Iranian administration in a negotiating process have not so far succeeded." The picture is clear, but not to the Europeans. The sanctions on Iran are working to squeeze them on domestic oil/gas production, but it has caused the Iranians to seek out the nuclear solution to their energy needs....among other things. Not to forget, they also have a very militaristic leader making threats to wipe out Israel.

Bottom line: Watch for the situation to become more unstable should Iran ration gasoline next month. Things could really get ugly as the US surge gets going and the forces start encountering Iranians inside Iraq.