Politicians & Oil Speculators Meet at the Oasis

A top Democrat has asked the Commodity Futures Trading Commission to see if rogue actors including Iran manipulated oil prices with rumors this month.

U.S. crude prices are down 51 cents, or 0.51%, to $106.17 per barrel. Some of the big integrated oil names were down about 1%, including ExxonMobil (XOM)? BP (BP) and Total (TOT) , while ConocoPhillips (COP) was down fractionally. Chevron (CVX) was up slightly.

Sure, presidential election campaigning is in full swing, and U.S. gasoline prices are high. But two weeks ago, reports circulated that a pipeline fire in Saudi Arabia was a threat to oil supplies. The Saudi interior ministry denied the report.

Enter Edward Markey, the top Democrat on the House Natural Resources Committee, who drafted a letter to the CFTC, the U.S. futures regulator, to determine if the surge in oil prices that followed the Saudi fire headlines could be blamed on Iran or its connections, or other market manipulation by speculators, according to a Reuters story.

This reporter got wind of the rumor just before the close on March 1, with a link to an article in The Arab Digest showing photos of a fire, but no distinguishable pipeline and a comment from Saudis that the fire was far from pipelines. The article’s author said the fire was? “a message to the U.S. administration to convince Saudi Arabia’s government to engage in serious reform.” But the author was anonymous “because of persecution and repression,” according to a comment on the article.

The Digest says it bucks the trend in traditional Arab?media, which are “mostly controlled by oil rich regional powers, and thus almost always, partisan/biased.”

In the end sanctions against Iran are a real source of curtailed supply, and therefore prices. Countries or entities that receive Iranian oil face fines if they don! ’t comply with sanctions. And prices face further volatility anytime Iran renews, as it has in recent months, its periodic threat to cut off the Strait of Hormuz, which is the gateway for nearly a quarter of the world’s oil trade.