For years we have been hearing that Iran was well on their way towards a nuclear future but the IAEA always said they were years away from having the capability. Unfortunately that has changed.
The United Nations nuclear agency, the International Atomic Energy Agency or IAEA, says it is increasingly concerned that Iran has conducted experimental work to develop nuclear weapons and in particular on warheads to deliver nuclear payloads. Pardon me but this is a shock to who?
Iran has been experimenting with building rockets specifically designed to deliver long-range payloads of the size and shape of nuclear weapons for years. They have written about the damage they could do to America with a high altitude nuclear blast to create an Electro Magnetic Pulse or EMP. They have tested rockets that went to the high altitudes necessary for an EMP and then triggered conventional blasts to prove their concept. The U.S. and the U.N. has warned for years that Iran was trying to build nuclear weapons. Why in the heck should anybody be surprised today that they have the capability?
They are surprised because Iran proudly demonstrated a new centrifuge technology that was years ahead of the contraband technology they bought from Pakistan many years ago. Their new centrifuges can produce enriched fuel at a much faster rate than anyone expected.
The first centrifuges were called IR-1 for Iran-1 and they were shoddily built from designs purchased from Pakistan along with designs for nuclear weapons. The IR-1 designs were poorly built and frequently self-destructed. The IR-1 centrifuges of which Iran constructed several thousand were the target of the Stuxnet worm that was designed to make them speed up erratically and self-destruct. The centrifuges spin extremely fast and any induced instability is fatal. The worm was designed to make them speed up erratically to induce that instability. It is thought that Israel and possibly the U.S. worked to create that worm.
That setback Iran several years but they have progressed to new levels. The IR-2 version was completely created in Iran factories because of the UN embargo of any type of component. The UN investigators did not realize how far Iran had progressed until they saw photographs of an IR-2 disassembled on a table from pictures taken as Ahmadinejad toured the Natanz plant. The second generation centrifuge had rotors made out of carbon fibers not the high strength steel covered by the embargo. Surprise! It also shows that sometimes the biggest theft of secrets comes not from spies carefully infiltrated into the plants but from stupid officials carelessly releasing pictures to the press of Ahmadinejad in what they thought was a publicity promotion but finding out later they accidentally showed top secret gadgets in the background.
The new UN report claims Iran has begun using 54 of the new centrifuges and they are so efficient they can enrich at a much faster rate than the IR-1 versions. But wait, it gets worse. Iran has now upgraded their technology to what they call the IR-4 that is even more significantly advanced than the IR-2. The IAEA team said Iran could produce much higher enriched uranium than their current 20% level in a very short period of time. The new report suggested Iran had enough processed uranium to make six warheads within a matter of months.
The IAEA said it was "increasingly concerned" about Iran's military capability and how quickly it could be completed if Iran sought to do so. The U.S. previously thought it would take Iran two years to produce enough weapons grade uranium to make a bomb. My, how time flies when you are not paying attention.
So what does this have to do with oil? Obviously the U.N. community has fallen behind the curve on their U.N. sanctions against Iran. The current sanctions did not keep Iran from making giant strides in nuclear capability and they did not convince Iran it was unacceptable to continue their uranium program. These sanctions will have to be increased significantly to the point that Iran finally buckles under and halts its nuclear program.
What that means is that the U.N. countries will have to increase sanctions to further restrict oil sales from Iran and sales of nearly every non-humanitarian commodity flowing into Iran. Since there are countries that could care less about U.N. sanctions and will continue to buy oil from Iran no matter what, the U.N. may have to sanction some strikes at oil facilities to show Iran they are serious. I realize that is a drastic step but so it Iran having functioning nuclear weapons. Which is more serious? The U.N. taking out a pipeline of loading facility or Iran launching a nuclear missile towards Israel or taking out the U.S. eastern seaboard with an EMP strike? Both of those targets have been discussed in public by Iranian officials.
The E.U announced a ban on imports of crude oil from Syria this weekend and that is in response to internal civil strife and the repression of protestors against President Bashar al-Assad. The potential threat of a nuclear Iran is a thousand times more dangerous than Assad.
With the U.N. report made public this week Iran was quick to announce an offsetting nuclear announcement. They claim the Bushehr reactor was connected to the country's electric grid and is now producing 60 megawatts of power. The eventual capacity is 1,000 megawatts. The reactor has been plagued by delays including sabotage by the Stuxnet worm. All the fuel had to be removed from the plant until the damage could be repaired. By announcing the operation of the plant on the same weekend as the IAEA report Iran hopes to again confuse the issue on whether its nuclear program is peaceful.
I don't expect new sanctions next week or even next month but I do expect this problem to come back to the forefront and it will eventually heat up to the point where action will be taken. Iran produces about 3.0 million barrels of oil per day. If the U.N. eventually is successful in shutting down their export capability that means the world will be significantly short of oil. It is only a matter of time.
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