Well, old Sadamm has us by the short hairs and he know's it! This morning there were many blustery headlines about the UN vote which was certain to pass, blah blah blah. All of these stories were misleading in that Iraq has clearly stated previously that they were done with sanctions and arms inspections. It is particularly telling that the US and British positions were flexible enough here at the end to offer to completely lift any cap on oil sales. Believe me, Bill Clinton and Bill Richardson would love to see prices come off the nine year highs we hit this week. So much jawboning took place in the form of bullshit headlines this morning that WTI was down over 80cts and brent over 50cts in response. However some stories surfaced that as I had suspected last week, there is big trouble in UN land these days for us. By the time the dust cleared, China, France, Russia and Malaysia all had decided to abstain. So....basically the US and Brits were looking for approval all by their lonesomes. And that's just what they got. Incidentally, during the choppy midmorning trade, a blurb surfaced on Platt's that said that there were rumors of delays at the Iraqi load ports.

Once the vote was in, the positive spin started flying. Then about an hour or two after, headlines started showing up from the Boys in Bagdad saying the UN could go stuff itself. The one I saw was Iraq " categorically" rejects UN sanctions.

Look people, it's pretty simple. If Saddy doesn't want to pump he doesn't have to. And as I suspect this is all part of his grand plan to really stick it to us. The headlines should read "Lack of Coherent US Foreign Policy Cost's US billions and adds to inflation".

By the time i left for the day, TI was only down 20 or so and brent was almost flat or positive. How bout them apples?

Also, I saw that the German Bourse was closed this morning due to a computer problem. This is about the third time in two weeks as best I can remember. Not much time for preps now...those of you who've bought the spin, best of luck. Those of you who've endured the taunts of many regarding your "paranoia" take heart. NO ONE can fault you for trying to protect your family. Anyone who tries to tell you that crude oil isn't reflecting Y2K concerns at this point is smoking crack.

For educational and spin correcting purposes only:

Friday December 17 2:32 PM ET UN Council Narrowly Okays Key Resolution on Iraq

Reuters Photo By Evelyn Leopold

UNITED NATIONS (Reuters) - After months of bickering, the U.N. Security Council narrowly adopted a resolution that could send U.N. weapons inspectors back to Iraq and ease Gulf war sanctions if it cooperates with them.

The vote was 11-0, with abstentions by permanent council members China, France and Russia, along with Malaysia, thereby sending a message to Iraq of divisions in the council.

Despite the abstentions, the resolution, which required nine votes and no veto to be adopted, has the impact of international law. Even Russia's ambassador Sergei Lavrov, its main opponent, said there was no split in the council on the need for a resolution to be adopted.

``It was little short of miraculous that we got to a result on this very difficult subject,'' said British Ambassador Sir Jeremy Greenstock, its sponsor and key negotiator.

Baghdad, which has long claimed it no longer has any weapons of mass destruction, has already stated its rejection of the resolution, presenting the council with a looming new problem of whether it will accept the measure in future.

U.N. teams hunting down President Saddam Hussein's weapons have been barred from returning to Iraq since being withdrawn almost exactly a year ago.

They left shortly before the United States and Britain launched four days of air and missile attacks in retaliation for Iraq's failure to cooperate with U.N. weapons experts.

The resolution leaves many tasks to be fulfilled over months to come. But it immediately lifts the cap on how much oil Iraq can sell under the three-year-old U.N. ``oil for food program,'' currently set at $5.26 billion every six months.

This enables Iraq to buy food, medicine and other necessities to help offset the effects of stringent economic sanctions in force since its August 1990 invasion of Kuwait.

The long and detailed document sets up a new arms inspection agency, called the U.N. Monitoring, Verification and Inspection Commission, or UNMOVIC, to replace the old U.N. Special Commission (UNSCOM) that has been in limbo for most of the past year.

It is in charge of ballistic weapons and chemical, biological arms programs while the Vienna-based International Atomic Energy Agency remains responsible for monitoring Iraq's nuclear weapons program.

The main issue of contention, that brought the abstentions, was what Russia, China and France called the lack of clarity in spelling out exactly disarmament tasks Iraq had to meet before a suspension of the sanctions, imposed after Baghdad invaded Kuwait in August 1990.

The resolution is intentionally vague on this point. It would suspend sanctions against Iraq, renewable every 120 days, if inspectors report that Baghdad had cooperated with them ``in all respects'' and shown progress toward answering their questions about its disarmament. Council members would have to take another vote.

U.S. envoy Peter Burleigh told the council: ``Today's resolution does not raise the bar on what is required of Iraq in the area of disarmament. But it also does not lower it.''

Russia and China had wanted the sanctions to be suspended soon after Iraq allows inspectors to return while the United States and Britain pressed for key, though not all, arms tasks to be fulfilled. The new UNMOVIC will draw up the tasks.

France was torn between joining the West or retaining its ties to Baghdad, and first delayed the resolution to try again for consensus and finally decided to abstain.

Russian Ambassador Lavrov said one of the most important steps was to choose a new chairman of UNMOVIC and see what disarmament demands would be drawn up.

In an indication of difficulties to come, he said it was ''unacceptable to allow the repetition of the situation where the fate of a whole country is in the hands of, or to put it mildly, the inadequate leadership of the former Special Commission.''

And he told the council: ``Without cooperation from Iraq, any plans or projects will just remain on the paper they are written on.''

China's Ambassador Qin Huasun said the lack of consensus made the resolution unenforceable. ``To put to vote a draft resolution under such circumstances, wherein no consensus is reached after prolonged consultations, will not possibly solve the age-old Iraq issue,'' he said.''

The resolution also calls for the immediate streamlining of procedures for Iraqi imports of foodstuffs, pharmaceuticals, medical supplies, agricultural equipment and educational items.

But Iraq's oil revenues will still be paid into a U.N. escrow account, from which suppliers will be paid and about one-third deducted to pay Gulf War reparations and meet other expenses.

Parts and equipment to upgrade Iraq's oil industry will also be expedited on the basis of lists drawn up by a group of experts. A panel is to survey Iraq's oil industry and recommend long-term improvements that the Security Council would consider above the current limit of $300 million every six months.

Friday December 17, 2:06 pm Eastern Time Iraq-un-parliament Baghdad ``Iraq does not accept the new resolution and will not accept any decision which does not lift the embargo without any restriction or condition,'' he said.

The Security Council, ending months of contentious negotiations, adopted a resolution that could send U.N. weapons inspectors back to Iraq and ease Gulf War sanctions if it cooperates with a new U.N. disarmament agency.

The vote was 11-0, with abstentions by permanent council members China, France and Russia, along with Malaysia, thereby sending a message to Iraq of division in the council.

The resolution was sponsored by Britain, which holds this month's council presidency and which led many of the negotiations on the measure.

-- Gordon (g_gecko_69@hotmail.com), December 17, 1999

Answers

Gordon, thanks for covering the oil beat for us, it's reporting and commentary such as yours that make TB2000 a refuge for truth and reality amid the storm of lies and deceit.

Thanks from all of us.

***

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-- Zen Angel (EndofDays@Now.com), December 17, 1999.

The UN vote and Iraqi posturing may not matter...if SODAMN INSANE can't get his oil out of the ground and onto compliant ships!

-- Mad Monk (madmonk@hawaiian.net), December 17, 1999.

Monk, you're missing the point. It's not going in the tankers now, and it matters a great deal. We will be that much shorter on crude at new years globally and in the mean time, bonds and inflation are putting enormous pressures on the financial markets.

-- Gordon (g_gecko_69@hotmail.com), December 17, 1999.

Gordon, you seem to have a penchant for predicting the goings-on in the oil industry. I must agree that I, too, look forward to your posts and find them remarkably on the money.

I was unaware that the Bourse was closed a total of three times. I had only heard of the first one.

I suspect the world has grown tired of the international role of policeman adopted by the US. This dominance may also apply to the dollar as well as to control of oil. The times they are a changing and not necessarily for the better, at least for us.

Y2K will be the catalyst for changes we cannot even imagine.

-- ghost (fading into the@background.com), December 17, 1999.

I agree on the so what if Iraq has problems post date change. They can stick it to us now and beat the Holiday rush. Talk about alchemy old Sadddly may know his business is toast and if so thinks, why not get some mileage, and give us the old bird. He did not survive as long as he has with enemies EVERYWHERE by being stupid. Although he doesn't really understand the US much because he could start the panic early by flooding the media with reports that gee, here in Iraq we have found we can't make it and then suggest that maybe there are others who are in trouble. The rest of OPEC might not approve of such a measure. The other win is that if there are disruptions and the price skyrockets then pumped but not delivered becomes extremely valuable. HHHhhhmmmm isn't Iran sittiing on tons of oils in storage but not in transit?

Watching the fed is beginning to look like a high wire act, but his frantically waving arms are starting to look less like part of the act.

-- Squid (ItsDark@down.here), December 17, 1999.

Gordon,

Signs of the Times? Today the spread between the near contract (January) and the March contract closed to just a little over $1 a barrel. Two weeks ago the carry was roughly $2.

Indicates to me that -- regardless of the front month -- some people are making Y2K plays.

Does this jibe with what you're seeing?

-- (4@5.6), December 17, 1999.

Can anyone supply URL info for the following statement by Gordon? I have looked but I seem to be "search challenged". If this continues then it could be huge news. I remember one article a few days ago.

"Also, I saw that the German Bourse was closed this morning due to a computer problem. This is about the third time in two weeks as best I can remember"

-- ghost (fading into the@background.com), December 17, 1999.

Gordon - excellent as usual - keep 'em coming.

I also suspect that some Middle East nations will stick it to the west and blame it on y2k, the oil prices rises, they still get paid, they get to keep their commodity for longer - OPEC wins, they all win...

This is from USAGOLD...

A clear sign the world is desparate for more oil...the UN has suddenly become very agreeable

http://quote.bloomberg.com/fgcgi.cgi?ptitle=Top%20World% 20News&s1=blk&tp=ad_topright_topworld&T=markets_bfgcgi_content99.ht&s2 =blk&bt=blk&s=d74a4d9d986e673700274ac9e22423e1

Bloomberg reports that the UN Security Council has approved by an 11- 0 vote to provide for an alternative weapons inspection agency for Iraq instead of Unscom, and more importantly, to remove the limits on Iraq's oil exports WHETHER OR NOT Iraq accepts the new disarmament agency's inspectors.

The UN continues to control how Iraq's oil revenue is spent, and further sanctions are said to remain until inspectors are allowed to return and Iraq is confirmed to be rid of any weapons of mass destruction. Up until now, Iraq has been limited to exporting $5.26 billion during each new six-month phase of the UN's oil-for-food program. Under that program, Iraq had been providing the world with over two million barrels per day.

In truth, this new development will affect the oil market pricing sentiment more than it will affect the supply reality because Iraq was already producing at close to its capacity. Ahhh....politics.

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OIL

We already wrote up earlier in the day the significant devleopment in the oil market. Please scroll down if you have interest in reviewing those details. Essentially the UN Security Council passed a resolution to get weapons inspectors into Iraq under different terms than Unscom, and also lifted the limits to Iraqi oil exports. Although Iraq was already producing a near capacity, the potiential for this lifting of limits to weigh against market sentiment was certainly present, and in fact the price temporarily plunged to $25.90. Properly confusing the traders into an appropriate recovery in price was Iraq categorically rejecting the notion of weapons inspectors. The production ceiling is gone however, though the supply...well, where's more oil gonna come from? No net change should have been the result of the news, and by the end of the day that's exactly what we had. January crude ended off only 9" at $26.74.

-- Andy (2000EOD@prodigy.net), December 17, 1999.