We'll see $150 oil overnight if the Iran-Saudi spat becomes a shooting war

Both countries have the capacity to cripple each other's oil infrastructure. Ponder that for awhile when you contemplate the potential ramifications of the scary headlines you're seeing today.

Outrage over Saudi's execution of a prominent Shia cleric has got the entire neighbourhood on a keener edge than ever before. This is a story that has numerous backstories. There's an ongoing power-struggle going on in Saudi Arabia that is both internecine and inter-generational, and all bets are off on who might prevail.

Then you've got your outside interests, primarily the US, Israel, and Russia. The American's have been making nice with Iran, at least at the official level. However, there is a huge cadre of neocons in the beltway who have seen these efforts to normalize US-Iran relations as a stab in the back to our Israeli allies. And of course that's how it's perceived among some elements of the Saudi elite as well.

Meanwhile, there's also been a steady back and forth between Moscow and Riyadh in diplomatic traffic. At least some elements in the Saudi ruling clique recognize that the current "make up for price by selling more volume" strategy is, in the long run, economic suicide for Saudi Arabia. If it goes on long enough, it will cripple the Russian economy as well.

That's a lot of very unpredictable balls in the air.

The prudent investor might want to consider bulking up on crude futures. WTI has gained a couple of percentage points today, but that's nothing compared to what will happen when the Strait of Hormuz is shut down.

And that is a very real and very imminent possibility.

Eager to turn page on golden shower snuff video, Pentagon ramps up anti-Iran propaganda

CNN, the official media outlet for the US military, has some scary stuff on its website at this hour. Really scary.

So scary it's their top story. Seems that just a week or so ago the US Coast Guard ship Adak was harassed by Iranian Navy speedboats. You read that right. Harassed.

Now, set aside for a moment the obvious question, which is why the US Coast Guard is guarding coasts in the Persian Gulf, and focus on the meat of the issue.

There were Iranian personell on those Iranian boats off the coast of Iran, and they appeared to be holding AK-47 rifles!

Holy shit! Not the dreaded AK-47! And the Adak only has multiple .50 cal machine guns! Oh my God!

According to the CNN article, the Iranians were "provocative" twice, "aggressive" four times, and "threatening" twice in the space of about eight hundred words.

Luckily for our freedoms, our brave coast guard sailors held their ground, or at least their little patch of the Strait of Hormuz, and no shots were fired.

But at CNN it's the most important story in the world right now.

Iran ups Mid-East tensions; threatens to defend Iran

Iran made a fresh move to ratchet up tensions today, implying that they would defend themselves in the event they were attacked by the US.

The Iranian statement is seen as a grave threat by military experts. It comes days after Iran test fire a missile and held "war games" in the Strait of Hormuz.

"Iran is making a very clear threat," says Simon Henderson of the Washington Institute for Near East Policy, a so-called think tank that has never seen an oil-rich middle-east nation that we shouldn't control.

"The people of the towel must submit to manifest destiny or risk the wrath of the masters of the universe. Resistance is futile."

Iran threatens oil supplies and suddenly it's 1973 all over again

Who remembers 1973?

I sure do. Worked at the Budd Automotive plant at the time. Building frames for Torinos and Impalas and the like. The Arab oil embargo hits, and I go from making a fine paycheck to a layoff notice faster than you can say can't-make-my-payments.

Folks weren't buying Torinos and Impalas. They went to Toyotas and Datsuns like somebody had flipped a switch. Last frames I built were a special order for the Arkansas highway patrol. At least they kept with the big cars, but it wasn't enough to keep our plant going at full capacity.

That little hiccup in the economy cost me my beloved 455 Trans Am SD. In some ways it was the sweetest car I ever owned. Handled like it was on rails. Absolutely gobs of torque. She could break the tires loose when you stood on it too hard in forth gear.

I remember to this day President Nixon going on TV to say this would never happen again. Being dependent on those fickle towelheads for our oil supply just didn't cut it.

So now it's almost forty years later. Price of oil goes up every time Ahmadinejad reminds the world that he can close the straits of Hormuz in ten minutes. Which you can hardly blame him for doing given that every other day Hillary or Obama or Panetta make a point of reminding him that "all options are on the table".

Which brings me back to Nixon's promise.

How is it that after forty years we're as dependent on middle east oil as we were then?