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Escalating tensions with Iran have pushed the cost of crude oil higher as fears mount that a 1970s-style jump in the oil price could send both Eastern and Western economies into recession. Iran's threat to cut off access to the Strait of Hormuz – through which 40pc of the world's oil is shipped – has provoked an angry rebuke from the US, which has the Fifth Fleet nearby.

Today, French foreign minister Alain Juppe supported the American hard line with Tehran, and urged European leaders to impose an embargo on Iranian oil exports and freeze Iranian central bank assets by the end of this month. Currently, Italy imports 13.3pc of its oil from Iran, Spain 9.6pc, Greece 34.7pc and France 4.4pc. International strains over Iran's nuclear ambitions were further exacerbated by the country staging three days of war games in the Hormuz area. However, Tehran said that increased sanctions could result in it closing off the strait, which it declared was "easier than drinking a glass of water".

But Iran's own oil supply is only part of the problem - the real threat is that disruption would halt the passage of oil from other Middle Eastern countries such as Saudi Arabia - the world's largest oil producer – and Kuwait. Qatar's liquified natural gas supplies would also be affected. Roy Jordan, of FACTS Global Energy, said: "If supply through the Strait of Hormuz is cut off, just about everybody in the East and West would be in trouble. It would disrupt major proportion of the world's oil and gas at a time when many of the world's economies are very fragile and would not be able to sustain a serious oil spike."

Mr Jordan said that its effect on Asian countries, which are driving world growth, would be devastating. China, Iran's number one customer, imports 10pc of its oil supply from Iran. "All it would take for Iran is a few mines put into sea, and ship owners and insurance companies would not go up there," said Mr Jordan. Brent crude rose $3.74 at $111.12 and Mr Jordan warned that if Iran's threat was fulfilled "there would be an instant escalation of price – we saw $147 in 2008 – and it could definitely reach that level and even higher." In 1974, after the Yom Kippur war and Iran's own embargo of its oil to countries supporting Israel, oil prices increased 400pc in six months.

However, Iranian officials have threatened to close the strait in the past but have not done so. But according to Mr Jordan if sanctions became such that Iran couldn't sell its oil then the country would have nothing to lose in its dealings with the West. "This is a situation we must avoid," he said. If no resolution is found, or hostilities break out, the International Energy Agency would have to force its members to try to make up the shortfall by releasing supplies from their reserves. But alternatives to Hormuz are few and far between. Iraq can already get its production into the Mediterranean through a pipeline across Turkey and a new Abu Dhabi pipeline is being built. This will come on stream early this year with 1m barrels of capacity, compared to the 18m that travel through Hormuz.

However, a recent article in Mashreq News, which is close to the Iranian military circles, pointed out that the new construction was "within range of Iran's missiles". Analysts suggested that while the closure of Hormuz remained a threat a premium was already priced into internationally traded crude that would slowly tick higher and higher. But if the strained supply days of the 1970s were to return, governments – including the UK's – would have to enforce demand restraint, with only essential services like ambulances and police getting access to petrol.

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KUALA LUMPUR, July 8 (Bernama) -- Malaysia may slip into a double-dip recession if European countries face a similar slowdown, said Tun Dr Mahathir Mohamad.

The former Prime Minister said there were emerging signs of a double-dip recession hitting European countries and this would indirectly influence the Malaysian economy.

"I just returned (from England). In Europe (a double-dip recession) is imminent. If that happens, we may also be "infected", he told reporters after witnessing a contract signing agreement between Iris Corp Bhd and Koperasi Atlet Malaysia Bhd here Thursday.

Dr Mahathir was commenting on predictions made by economists and analysts that a double-dip recession may occur in the second-half of this year and whether Malaysia would suffer the same fate.

While saying the government had in place several economic plans and adopted progressive measures like the New Economic Plan, Dr Mahathir said it would, however, be difficult to predict the future as whatever occured overseas would have repercussions on Malaysia.

"Government is doing a lot of things but we cannot predict (the future) as external developments do affect us," he said.

Prime Minister Datuk Seri Najib Tun Razak said on Tuesday that Malaysia may face a possible slowdown in the second-half of the year prompted by external factors.

A famous banker also said recent data emerging out of the United States and Europe pointed to a possible global economic recession.

-- BERNAMA

In a long-term assessment of employment data released last week, the Bureau of Labor Statistics surveyed the country's jobs landscape and developed a picture of how it's likely to evolve over the next ten years.

As the population ages and manufacturing jobs wane, much of the next decade's employment growth is expected to be in service industries -- such as health care services or business services -- which are projected to make up a whopping 96% of the increase in new employment.

But if some industries flourish in the new economy, others are likely to deteriorate -- and slash jobs. And in the report, the government pointed to ten struggling industries that it says are likely to hemorrhage the most jobs in the next decade.

Did your industry make the list? Check them out below:

#10 Wired telecommunications carriers, -73,000

The Bureau of Labor Statistic predicts that the wired telecommunications industry, which provided 666,000 jobs in 2008, will lose 11% of its employment opportunities by the end of the next decade.

#9 Gasoline stations, -75,000

By 2018, the number of gas station industry jobs, which in 2008 stood at 843,000, is likely to be cut by 9%, according to the government report.

#8 Support activities for mining, -76,000

The Bureau of Labor Statistics forecasts that around 23% of the jobs in the mining support industry -- which as of 2008 sustained around 328,000 jobs -- will be lost by 2018.

#7 Newspaper publishers, -81,000

Think the worst is over for print media? The government estimates that within the decade that number will dwindle by nearly 25%, to 245,000.

#6 Cut and sew apparel manufacturing, -89,000

Despite widespread outsourcing to overseas manufacturers, in 2008 there were only 155,000 jobs in cut and sew apparel manufacturing in the United States -- the industry with the fewest jobs on this list. The Bureau of Labor Statistics anticipates that the industry will lose 89,000 jobs -- 57% -- by 2018.

#5 Printing and related support activities, -95,000

Whither Kinko's? The printing industry provided 594,000 jobs in 2008, of which the Bureau of Labor Statistics estimates it will lose about 16%, bringing the number down to just under 500,000.

#4 Postal service, -98,000

The postal service employed 748,000 people in 2008, but the government anticipates the number will fall 13% over the next decade to 650,000.

#3 Auto parts manufacturing, -101,000

The auto parts industry contributed about 544,000 jobs to the U.S. economy in 2008. Despite massive bailouts of the Detroit automakers last year, the government predicts the industry that serves those companies will lose almost 19% of its jobs.

#2 Semiconductor and other electronic component manufacturing, -146,000

The Bureau of Labor Statistics projects that the semiconductor manufacturing industry will lose almost 34% of its jobs by 2018. That would bring the industry's total jobs down to 287,000 from the 432,000 jobs the industry supported in 2008.

#1 Department stores, -159,000

In 2008, there were 1,557,000 jobs in department stores -- more than any other industry on this list. But the government forecasts the industry will lose 159,000 of them -- more than 10% -- over the next ten years.

source HERE

HONG KONG: Albert Edwards, an analyst at French bank Societe Generale who correctly predicted the Asian financial crisis, sees global equity markets at a new low and chances of another global recession in 2010.

Edwards, a prominent equities bear and a long-term critic of the policies of Western central banks, is sceptical of popular opinion that extreme policy responses will safeguard the West against a repeat of Japan’s “lost decade” of the 1990’s.

“People should question the happy clappy nonsense from sellside analysts,” London-based Edwards, a global strategist with SocGen’s Corporate & Investment Banking group, told a media briefing.

“We are not saying that people should not participate in the rallies – that will get you fired as a fund manager – but they should not become too convinced of the recovery,” he said.

Edwards is more worried about Japan in the near term as he expects the world’s second-largest economy to run into difficulty funding itself next year as demand for Japanese government bonds wane and bond yields rise further.

The significance of higher Japanese government bond yields was that it would cause some Japanese investors, who have been investing overseas in search of higher returns, to bring that money back home, he said.

Edwards expected China to go into a recession at some point as cyclicality catches up with the economy, and called people’s excessive faith in growth stories a “sick joke”.

He said while inflation was a concern, deflation was a bigger worry in the near term, at a time when Western and Japanese governments were effectively insolvent.

“If we get an economic downturn next year, when you have got core inflation at half a percent, I think there will be a real deflation panic, a bit like in Japan.”

Edwards picked grains like corn, wheat and soybeans as a more secular bet on China’s growth story over other commodities and their related stocks as these have lagged the broad rally in the markets.

“Equity valuations have been totally ridiculous for the last 10 years but I’m less bearish than I was two years ago because we have had one round of correction,” said Edwards. — Reuters

source HERE