The war in Iraq has been “over” for less than a week and already its citizens are protesting in the streets. It won’t be long until chaos prevails.
Last week, a decade of war officially ended. There was no pomp, no drums and bugles, no aircraft carriers sporting a “Mission Accomplished” sign.
Just a quiet dignified lowering of the colors, rolling up of the Marine Corp flag.
I’d like everyone to take a moment to thank our servicemen and women for all the hard work and sacrifice they’ve made for their country. And I’d like to thank their families for their own dedication and sacrifice.
So many have been lost… But now, tens of thousands are coming home.
We did it. We removed a brutal dictator and ushered in democratic elections. Iraq is now in charge of its own destiny.
We all hope it’s a good one.
We all hope that the old political and ethnic tensions won’t rumble to the top and boil over into yet another war in the Middle East.
But that’s what the newly democratic country is facing.
From The Wall Street Journal:
Tensions are growing in Iraq over plans by some predominantly Sunni provinces to declare greater autonomy from the central government in Baghdad.
The provincial council of Diyala, a volatile area northeast of Baghdad and bordering Iran with a patchwork of ethnic and sectarian groups, said Tuesday that it was moving to hold a referendum to declare itself semiautonomous.
The timing couldn’t be more planned… On Dec. 31, 2011, U.S. troops will leave Iraq. It’s no surprise that the internal divisions between Sunni and Shiites are starting to widen.
Within Iraq, these tensions are one thing, but they won’t remain localized… Especially when Iran has so much to gain by backing its Shiite ideals.
And this has even bigger ramifications outside of stability within Iraq.
You see, Iran and Saudi Arabia are vying for control of the Middle East, and the two powers are very different. Iran is predominantly Shiite, while the powers that rule in Saudi Arabia are Sunni. Iran has been encouraging Saudi Arabia’s Shiite population to turn against the State.
Most of these Shiites live in the northeastern part of the country — right where the biggest oil fields in the world are.
And we’re set to leave the region in 12 days.
The announcement in Iraq set off a wave of protests and demonstrations in Diyala and Baquba. Diyala has been the center of a lot of tensions, and was even controlled in part by militants with al-Qaida connections.
Here’s the interesting part. The demonstrations were composed of both Shiites and Sunnis who were against the idea of semiautonomy. How this will play out across the country remains to be seen, but those sect-tensions aren’t going anywhere.
And the stage is being set for an even bigger confrontation.
Both Iran and Saudi Arabia have a lot of heft. Six months ago, Iran, and a couple other OPEC producers blocked production decisions at its meeting in Vienna. The internal struggles were so bad that some insiders didn’t think OPEC would survive.
They have, for now. And Saudi Arabia has appeared to take charge in OPEC’s latest meeting, where production quotas were decided: 30 million barrels of oil a day.
But Iran is not impotent.
Indeed, just last week Iran threatened to block the strategic Strait of Hormuz. About 15.5 million barrels of oil a day flow through the Strait. That’s about one-sixth of global demand, making the Strait of Hormuz the most important oil shipping route in the world.
To be clear… Iranian officials said its military will conduct a training drill to practice closing the Strait.
This mere threat sent oil prices soaring $3 back above $100 a barrel.
The real thing could be much worse. And the action will set off a number of counter measures that will end up in a devastating war.
Iran has already said it will strike Israel and other U.S. interests in the Gulf if it is attacked. Those other “interests” include oil and Saudi Arabia.
Think $100 is too expensive? OPEC doesn’t. They think it’s “reasonable.” That means they won’t lift a finger if oil prices climb because of geopolitical tensions between Iran and Saudi Arabia. Once the U.S. leaves, this age-old conflict will flare up again.
And oil prices will be caught in the middle.
Oil at $150 is not out of the question for 2012.
And if you’re like us, through the chaos, you’ll see an opportunity here. It’s time to batten down the hatches, folks. Use the recent pullback in oil prices to get positioned in some strategic oil plays. I’ve got my Macro Trader subscribers in some United States Oil (USO:NYSE) calls, but this is just the beginning of a longer-term strategy.
This conflict is going to create another hell for the Middle East, and a lot of money for savvy investors.
Insideinvestingdaily.com Publisher’s Note: Sara is right. We are one headline away from a massive spike in oil prices. We are ignorant to believe an age-old war between the Sunnis and the Shiites will fade away simply because we lowered our flag and went home.
The sad truth is, we are in worse shape now than we were eight years ago. And if what we think is about to happen becomes reality, it is great news for gold investors. If you want the in-your-face details, you need to read Sara’s urgent report on the situation.