Daily Sources 9/2

1. The WSJ has an editorial praising Japan's Prime Minister Fukuda, but pointing out that his resignation yesterday makes the outlook for the world economy a bit more uncertain.

2. Jay Deshmukh at the AFP reports that the Iraqi cabinet has cleared a deal for China to develop the Al-Ahdab oil field at $6/b service fee. The service contract builds on the original 1997 deal China struck with Saddam Hussein. Production for the first three years is slated to be 25 kb/d, or $54,750,000/year in service fees to China.

3. In his September 1st posting on Informed Comment, Juan Cole writes that the al-Maliki government is mounting a campaign against families that have moved into homes vacated via ethnic cleansing in Iraq and having a hard time convincing 200,000 Iraqi refugees in Jordan to return. In the post, he also updates story of tensions between the Kurdistan Regional Government and al-Maliki in Khanaqin in Diyala. Apparently, al-Maliki has also threatened any Peshmerga forces discovered operating in Iraq proper with prosecution.

4. Reuters reports that purchasers of Saudi Arabian crudes expect the country to lift the prices on its heavy sours and reduce the prices on its light sweets. This is likely to make folks in Iran and Venezuela happy, but might upset some folks in Nigeria. It is a response to the change in crack spreads, new sophisticated refining capacity has increased the demand for heavy crudes in Asia which, in turn, reduces the demand for light sweets, which sell at a premium to heavies.

5. Saul Hudson at Reuters reported that Caracas and other "major parts" of Venezuela were hit by a power outage yesterday. Chavez nationalized the largest private electricity company last year.

6. AFP reports that Iran has renewed its call for OPEC to discuss quota busting (member countries producing more than the OPEC agreed-upon production quota) in upcoming September 6th--this Saturday's--meeting.

7. On Sunday, Atul Aneja of India's The Hindu reported that Iran’s Foreign Minister Manouchehr Mottaki put the blame for the Georgia imbroglio squarely on the shoulders of the Georgian government.

8. Philip Sherwell and William Lowther of The Telegraph reported on Sunday that US intelligence fears that Russia is planning to sell its S-300 missile defense (ground to air) system to Iran, should NATO continue to expand with Georgia and the Ukraine. The Telegraph, it should be noted, is pretty yellow press, just look at the totally unrelated headline "Russia threatens to supply Iran with top new missile system as 'cold war' escalates," and so, everything stated should be taken with a grain of salt, to say the least.

9. The Associated Press reports that Putin complained of the ship build up in the Black Sea today.

10. Philip P. Pan and Temo Bardzimashvil at the Washington Post report that the EU has backed off on threats to impose economic sanctions on Russia as Russia appears to have agreed to move its troops back to the pre-Saakashvili attack positions.

11. Putin announced an agreement to build a new natural gas pipeline through Uzbekistan to move gas from Turkmenistan and Uzbekistan to Russia's pipeline network, according to Catrina Stewart of the Associated Press. (Readers should be cautioned that these announced "agreements" often don't come to fruition, and, if they do, tend to take a long time to do so. Chinese announcements are an exception, as they usually come to pass quickly, unless the deals are with politically significant countries, like the US, Iran, or Russia.)

12. Thomas M. Hoenig, President of the Federal Reserve Bank of Kansas City, says that financial institutions must be allowed to fail, as per Bloomberg.