“I guess they have their reasons,” said the President. “But even more worrisome is what the hell are the Iranians playing at? I know they believe the Gulf of Iran is, by its very name, theirs by rights, and that the West has no real business in there at all. But they also know that if they attempt a blockade of the gulf, we’ll dismantle it, and probably them with it. They’re not stupid, so what are they doing?”
“Six weeks ago, I could not have answered that question, sir,” said Arnold Morgan. “But things are coming to light. And again we are seeing a new rise in Muslim fundamentalism. Again the balance of political opinion is swaying against the West, and every damn time that happens you get a new militant resurgence in Iran. All those pictures we got from Tehran a month ago…the street riots…the new calls for elections. They were all shouting for the same thing — total separation from the West, the right to their own oil, the right to make the gulf private…the enduring vision of Islamic world domination.
“It’s a phase, but it’s a problem. Meanwhile, the present blockade of the Iranian Gulf is a giant-sized PITA…pain-in-the-ass, that is. We gotta get it cleared or we’re looking at world economic chaos.”
Admiral Zhang Yushu had just walked into his new office, where his Navy C-in-C, Admiral Zu Jicai, was already waiting.
“And what do the satellites tell us today?” he asked.
“Excellent news all around, Yushu. Two American CVBGs are closing the strait. The Harry Truman is plainly preparing to leave Diego Garcia today, and the U.S. carrier John F. Kennedy is under way, heading west out of Pearl Harbor.”
“That leaves just the Ronald Reagan Group still in San Diego, correct?”
“Yessir, and all the signs are that she is accelerating her overhaul, planning to leave in the next few weeks. There is truly the most thunderous commotion in the United States — every newspaper, every television network. They’re becoming hysterical about this threat to their national interest in the Strait of Hormuz.”
“Perhaps we should offer to sell them some very fine Russian oil, direct from our refinery in Iran…very cheap…fifty dollars a barrel…ha ha ha!”
“Yushu, you are a hard man. Although I admit the prospect has great appeal, I would counsel silence. Say nothing. Do nothing. See nothing.”
“Meanwhile, to more important matters, Jicai. Are these military estimates accurate? We still have sea-lift capacity for only twelve thousand troops? And two hundred fifty main battle tanks?”
“Yessir. But the turnaround time for our amphibians will be short.”
“Are the ships on their way back from the Indian Ocean?”
“Yessir.”
“Excellent. That’s the three guided-missile frigates, plus two Kilos?”
“Correct. They’re all on their way home, sir. And as you know, the destroyer is making its way back toward Bandar Abbas, just as a warning to the USA…that we don’t want them to attack our friends in Iran, under any circumstances.”
“Ah, but it’s a mission well achieved. Eh, my Jicai?”
“In the ancient tradition of the great Admiral Zheng He, sir. Just as you always dreamed.”
“And such a dream, my Jicai. Remember the words we all learned, the words written by the immortal Admiral five hundred years ago…And we have set eyes on Barbarian regions far away…while our sails, loftily unfurled like clouds, day and night, continued their course as rapidly as a star, traversing those savage waves….”
Zhang paused for just a moment. And then he said quietly, “That’s our tradition…and it’s only been dormant. Not dead. We will rise to rule those seas again.”
No day in the entire 26-year history of Europe’s principal oil futures trading floor had ever been awaited with more dread, trepidation and alarm. Here in the shadow of the Tower of London, bounded by streets with echoing names like Thomas More, hard by the waters of historic St. Katherine’s Dock, the industrial world’s fate hung in the balance.
Five hours before New York’s NYMEX oil trading gets under way on Wall Street, the London Exchange opens for business, setting the world’s pricing benchmark for the day, maybe the month. The commodity is Brent Crude Futures, and the price per barrel of North Sea oil is the one upon which the major international traders and investors are prepared to speculate.
If the traders think there’s likely to be a glut of oil in the foreseeable future, the price may go below $15, trading narrowly, varying by just a few cents either way. Any sign of a shortage, and the price may rise to around $30. A serious shortage can cause this swerving, volatile market to lose all sense of caution. When Iraq invaded Kuwait back in 1990, everyone thought the roof had caved in, and on one lunatic day at the International Petroleum Exchange (IPE), Brent Crude hit $70 a barrel.
Today the atmosphere was fraught. Captain Tex Packard’s ship was still on fire in the strait, and in London nervous representatives of the big oil producers, refiners, shippers, distributors and marketers mingled with other major users. Brokers representing the power generators, airlines, truck fleet operators, chemical companies and even supermarkets were on tenterhooks. The world’s most eminent money men from houses like Morgan Stanley were massed along with everyone else on the packed hexagonal-shaped trading floor, with its tiered pits, video surveillance and colossal security.
The previous night, Brent Crude had closed at $28 a barrel, up three bucks. And West Texas Intermediate in New York was tagged at a few cents below. Today cell phones were running up massive bills connecting the U.S. traders with London, long before the opening bell at NYMEX. What mattered right now was the opening bell in London, and the traders, wearing their identifying colored jackets, red, yellow, green or blue, thronged above the pits as the clock ticked on to 10 o’clock.
Bang on time it rang, signaling the floor was open for business, trading at first in natural-gas futures, the prices for which would explode before this day was done.
One minute went by, and then the clock hit 10:02 and the second opening bell rang sharp and loud, for the initial trades of Brent Crude Futures, the world pricing benchmark; at which point, on this day, the entire system of international oil commodity trading went berserk.
Pandemonium broke out as buyers yelled “PLUS TWO…PLUS TWO!” But these weren’t cents, as in the regular cries of “BRENT PLUS TWO!” These were whole dollars. Thirty, then $32, then $35, then $40. Bedrock prices for a barrel of oil had jumped 33 percent in nine minutes.
“Mother of God!” breathed the broker for Shell. And the trader for a New York Bank roared “PLUS FIVE…PLUS FIVE FOR 500,000….” Which pegged the price of Brent Crude Futures at an astounding $45 a barrel.
Dealers left behind in the stampede for the best prices surged forward as a rumor swept the pits that the price was going to $70. Brokers for the big finance houses huddled together, uncertain whether to chase the price up further, or whether to wait for the retreat some thought might not come. At least not on this day.
Snatches of conversation fired the desperate atmosphere. Yelling, classless British voices from London, interspersed with louder American tones…. “Jesus H. Christ! This can’t last…Bullshit it can’t…they’ve just closed the fucking Gulf of Iran…. It’s only three ships, for chrissakes! It doesn’t matter a flying fuck if it’s only one…right here we’re talking fucking minefields! That’s one step from global war…the U.S. Navy’s moving THREE aircraft carriers into the strait…you think this market’s fake? Forget it. There might be no more oil out of the gulf for six months.”