Expensive Oil Is Global Growth Dampener
Stocks opened down this morning based on concerns over the possibility of military involvement with Iran, and the simple dictum that pricier oil means less economic growth. The DJIA dropped 0.39%, the NASDAQ fell 0.21%, and the S&P 500 was off 0.28%. Meanwhile, Brent crude was up 12.02%, to 67.49 per barrel.
The Iran-backed Yemeni Houthis have claimed responsibility for the attacks that severely damaged the Khurais oilfield and Abqaiq processing facility, the largest of its kind, both owned by Saudi Aramco, the state-owned oil company. But President Trump and Secretary of State Pompeo disagree, saying there is no evidence of activity in Yemen:
American Taxpayers Unwittingly Financed The Precision Attack
Iranian and Iran-backed attacks on Saudi oilfields are nothing new, but this strike was much more devastating than any before due to the precision of the drones employed. Think about it: Saudi Arabia’s oil production halved in one attack.
Who paid for these advanced munitions? If you’re an American taxpayer, you did. When Barack Obama sent the infamous pallets of cash to Iran, some of the $1.7 billion made its way into the hands of militant Islamists. What’s more, the drones used are reverse-engineered copies of a captured American drone.
The U.S. money supplied to Iran as part of an arms settlement dating back to the 1970s also has been traced to Iran’s backing of Houthi rebels seeking to take power in Yemen. Iran has been supporting the Yemen rebels as part of a bid to encircle and eventually take control of Saudi Arabia.
So it’s a safe assumption that the latest salvo in the messy, ages-old Sunni-Shia and “petro-Islam” conflict was paid for in part by U.S. taxpayers, a fact that surely stirs the flames in Washington:
President Trump has authorized opening the U.S. Strategic Petroleum Reserve, “if needed, in a to-be-determined amount, sufficient to keep markets well-supplied.”
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