How Uprisings in a Tiny Persian Gulf Country Could Send Oil to $150 in a Matter of Days

The country of Oman is a tinderbox: Its sultanhas ruled for four decades, exports 750,000 barrels of oil a day and half its population is under 21 -- with massive unemployment.

Picture a feudal, or neo-medieval, paradise, the former home of legendary Sindbad the Sailor, absolutely ruled by an unmarried, slim, lute-playing septuagenarian who prefers to live alone in his palace; paradigm of discretion Sultan Qabus bin Sa'id. That, in a nutshell, is Oman.

Oman practices Ibadi Islam - neither Sunni nor Shi'ite - also found in selected latitudes in northern and eastern Africa. This couldn't be further apart from Wahhabism, or al-Qaeda style jihadi fanaticism. In Omani terms, Ibadi Islam involves finding the right mix between tribal custom and the state apparatus (Qabus is very fond of consultations with tribal leaders).

Washington - and London - absolutely love Qabus; the graduate of the Sandhurst military academy in Britain is a lover of Mozart and Chopin, and his strategic acumen is compared to Singapore's founding father Lee Kwan Yew. (When I went to Oman I actually felt I was in an Arabian Singapore. It helped that I had lived in Singapore. Everything in Oman is too neat - and too Disneyland-perfect, in a Singaporean Stepford Wives way.)

American love is helped by the sultan having given a big hand to George H W Bush during the first Gulf war in 1991 against Iraq's Saddam Hussein, and extending the favor to George W Bush, allowing for 20,000 US troops to hang out in Oman before the invasions of both Afghanistan and Iraq. To top it off, the deepest stretch of the exceedingly strategic Strait of Hormuz - essential for the navigation of supertankers in the Persian Gulf - lies in Omani territory.

Sorry to intrude on your idyll

Qabus, in power since 1970, may still not be an object of revulsion in his Gulf of Oman paradise. But his - and Oman's elites - time may be running out under the relentless great 2011 Arab revolt clock.

In The Economist's shoe-thrower index, Oman is in no less than sixth place, right behind Hosni Mubarak-deposed Egypt and way ahead of Zine el-Abidine Ben Ali-deposed Tunisia and Khalifa-in-peril Bahrain. Half the population of less than three million is less than 21 years old. Unemployment is rife - especially among the youth carrying a useless diploma. Of a total of up to 40,000 high school graduates a year, only a few find a job.

This could not but spell major trouble. Bloggers and tweeters from Oman stress there have been demonstrations in Sur and the crucially strategic ports of Salalah (in the south, near Yemen) and Sohar (where the police used live ammunition, killing a 15-year-old boy; the Omani police - as well as the Mukhabarat - is trained in Jordan). No less than 3,000 protesters were fought with tear gas. The road from Sohar to al-Ayn - across the border in the United Arab Emirates (UAE) - was shut down.

The protesters are basically complaining about miserable wages, compared to relentless, rising inflation; and that most jobs go to foreigners (employed by foreign corporations) or to Omanis from the capital Muscat.

Peaceful protesters say they won't relent until they get better pay. The sultan has preemptively raised the national minimum wage from US$316 a month to $520; protesters want "not less than $1,300". And more: better pensions; free further education for all Omanis; and even the resignation of the government. During the weekend, the sultan also reshuffled his cabinet and the government announced 50,000 more jobs, plus unemployment benefits. The protesters' reaction: "Mere words".

What's also crucial is that none of this is being fully reported in the Gulf. Al-Jazeera is eerily quiet. Al-Arabiyya - a House of Saud mouthpiece - is also very quiet. Not to mention broadcasters in Oman itself. Al-Jazeera has been heavily criticized in many quarters for weeks on its sloppy coverage of Bahrain - compared to a 24/7 blitzkrieg when it comes to Egypt or Libya. This has raised ample suspicion that for the emir of Qatar, there's "fight for democracy" (in northern Africa) and "fight for democracy" (in the Gulf).

Dire straits

Sohar - the former home of Sindbad - 80 kilometers from the UAE border and 200km from the capital Muscat, deserves very close attention. It is Oman's industrial powerhouse - harboring one the world's biggest port development projects plus a refinery, a petrochemical complex, an aluminum smelter and a steel factory. Oil workers in Sohar are now becoming protesters. It's not far fetched for them to block pipeline exports as a means of pressuring the sultan. Oman pumps around 860,000 barrels of oil a day and exports roughly 750,000 barrels.

The global economy knows the Persian Gulf is its number one oil hub. The paranoid notion that the Strait of Hormuz would be shut down by Iran in a war against the US/Israel was always a chimera fabricated by neo-cons. Reality is now spelling another scenario; real democracy intervening in "beacon of stability" Oman.

From the point of view of the global economy, the fight for democracy could become a nightmare scenario. Were both Libya and Oman to go totally out of the market, the global economy would lose 2.5 million barrels of oil a day, 3% of what it consumes. There's no evidence Saudi Arabia could compensate for it without pushing their equipment and infrastructure to the limit. Translation; oil may go beyond $150 a barrel in a matter of days. And this without even factoring possible March protests in Saudi Arabia.

Oman is not exactly an accident of history like the Gulf sheikhdoms - which were basically a "string of pearls" in the British empire's naval highway along the Indian Ocean. No wonder imperialist-in-chief Lord Curzon called them "petty Arab chiefships" (arguably that has not changed much under imperial US administration). As far as Washington is concerned, Oman remains the proverbial "stable US ally" - with its highly US-trained navy attached and, crucially, deployed right at the mouth of the exceedingly strategic Strait of Hormuz.

Oman is not exactly a recent family hacienda established in the desert - like the House of Saud. The ruling dynasty - al-Bu Sa'id - has been in power longer than the US has been a country.

But let's add some juice to all this "stability". Oman has harbored one of the most sophisticated opposition movements in the whole Arab world - largely embodied by the Popular Front for the Liberation of Oman. Some of its leaders were co-opted by the sultan, but the progressive, modernizing impetus remain.

As much as the US State Department goes out of its way to stress Oman respects human rights, political rights remain close to zero. No free press, no free speech, no freedom of assembly, no freedom of religion. Oman may not be ultra-repressive Saudi Arabia, or Wild West Yemen - but it's not Scandinavia either (Washington think tank types insist on comparing the sultan to Scandinavian prime ministers).

The great 2011 Arab revolt is, to quote Bob Dylan, "driving 90 miles an hour in a dead-end street" in Bahrain; is about to make a pit-stop in Saudi Arabia; and it has already hit Oman. The septuagenarian sultan has diabetes, no heirs to his throne, and is now officially puzzled by unemployed youth and angry workers right at this doorstep. Beware of humanitarian imperialism possibly rearing its ugly head in Libya. But all eyes should focus on the Strait of Hormuz; on the Omani, not the Iranian, shore.

Don't let big tech control what news you see. Get more stories like this in your inbox, every day.

Pepe Escobar is the author of Globalistan: How the Globalized World is Dissolving into Liquid War (Nimble Books, 2007) and Red Zone Blues: a snapshot of Baghdad during the surge. His new book, just out, is Obama does Globalistan (Nimble Books, 2009).