Osama bin Laden Killed In Pakistan

Jim Brown
 
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President Obama announced on Sunday night that Osama bin Laden was killed in a Special Forces assault on a mansion in Abbotabad, 62 miles from Islamabad Pakistan and 125 miles from the Afghanistan border. Equity futures spiked more than ten points and crude oil prices collapsed.

The impact of this news should be temporary. Analysts claim the security premium in oil prices will shrink now that Osama is gone. I completely disagree. The security premium for Osama disappeared a long time ago. The security premium in crude prices today is due to Libya, Yemen, Syria, Nigeria, Bahrain and Saudi Arabia. The knee jerk reaction to the news is just that a gut reaction to the news by traders long oil. When uncertainty rises traders move to the sidelines.

In an interesting twist to the story Pakistan is claiming early Monday that they killed Osama and then called the U.S. to come get his body so they could claim the $25 million reward. I don't know how much truth to give to this version since President Obama claimed U.S. Special Forces attacked the compound and killed Osama, one of his sons and two other men and a woman one of them was using as a shield. Other women were also injured.

Reportedly four U.S. helicopters attacked the compound in the early morning hours on Monday. One of the helicopters was shot down when Osama's guards opened fire from the roof of the building with rocket propelled grenades. Other reports claim the helicopter crashed because of mechanical problems and was destroyed by the team for security reasons. No U.S. soldiers were injured.

The mansion where he was staying was only 100 yards from a Pakistani military academy and in a town with a large Pakistani military garrison. This brings up a lot of questions on how he could have hidden there for several years without being discovered. There are many questions arising on the possibility the Pakistani military was protecting him. Critics have long accused Pakistan of protecting bin Laden although the government always denied the rumors. After all how easy is it to hide a six foot three inch individual with the most recognized face in the world and on kidney dialysis?

The mansion was built in 2005 with extraordinary security. The million-dollar home sat on eight times the amount of land for other homes in the area. It was a walled compound with 12-18 foot walls, walled areas inside the compound and restricted access by two security gates. The residents burned their trash, unlike their neighbors. There were no windows facing the roads outside the compound. Also unusual for that class of home it had no telephone or Internet service. U.S. intelligence analysts concluded it was "custom built to hide someone of significance." Osama was believed to have had a net worth between $25 and $100 million dollars.

Apparently the U.S. became aware of the residence and its possible involvement with bin Laden in 2009 but it was not until August of 2010 that they discovered several direct links involving couriers previously used by bin Laden and their routine trips to the compound. The two couriers were also killed in the attack.

Reportedly bin Laden participated in defending the compound and was killed in the firefight when he was hit in the head by a rifle bullet.

If there is going to be a change in the security premium in crude because of bin Laden's death I would think it would increase in the short term. Terror alerts are escalating around the world in fear of a wave of attacks to avenge the martyrdom of bin Laden. It has long been speculated that bin Laden had put in place a series of events to transpire after his death if he was ever killed.

This should be an interesting week in the oil market. Gaddafi's son and three grandchildren were killed and he has vowed to wreak vengeance on those who took part in the attack. Osama is dead and al-Qaeda will want to do something to show they are still a valid threat and are capable of carrying out attacks without him in control.

Jim Brown

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