The Shark Mutiny (13 page)

“Hey, that’s pretty neat,” said the President.

“And pretty time-consuming,” replied the Admiral.

“How many sweepers are the Indians bringing?”

“Six,” replied Admiral Morgan. “That’ll help speed things up.”

“Cost?” asked the Secretary of Defense, Bob MacPherson, predictably.

“I told the Indian Navy Chief that we would arrange for all affected nations to share the costs. Between us, the U.K., the Japanese, Germans, France and some of the Middle East exporters, it’ll come out as peanuts.”

“No problem,” said MacPherson.

“Look, Arnold,” said the President, using his adviser’s first name for the first time in months, “I know you want to play this down right now. But I’m not sure we shouldn’t go straight into Beijing and demand to know if they have played any part in this whatsoever.”

“Sir, they will simply deny any knowledge, whatever we say…and that brings me to a very serious point.”

“It does?”

“Yessir. From our observations it looks very much as if the mines were transported to Iran in Chinese warships. And now we have a situation where, for the next couple of weeks, the Iranians are going to get pretty rich. And to an extent so are the Chinese. They seem to have a way through the minefield, in Iranian national waters, and the price of oil futures is probably going to forty dollars a barrel for West Texas Intermediate on NYMEX and the same for Brent Crude on the London market.

“However, I completely fail to see what the Chinese are doing. How could it possibly be worth it?”

“Maybe they just want to show us they can be real world players in the oil game with their new Kazakhstan pipeline,” offered Harcourt Travis.

“Maybe,” replied Arnold Morgan. “But that’s a hell of a dangerous card to play for such a slim moral victory. Christ, for all they know, we might get seriously pissed off with ’em. It just doesn’t make any sense to me.”

“Well, Admiral, perhaps the political minds at the table can offer something that may have escaped you?”

“Beats me, sir,” said Harcourt.

“All I know is this,” said the National Security Adviser. “The Chinese are very devious, very patient and utterly insincere when it suits them. What they are not is very stupid. And, so far, everything in the Strait of Hormuz is plain stupid. What the hell are they doing getting mixed up in something like this?”

“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.”

Tuesday morning. May 1
.
PLAN HQ. Beijing
.

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.”

0955 (local). Tuesday, May 1
.
The International Petroleum Exchange
.
London, England
.

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
.”

Five minutes later the price hit $50 when a Rotterdam trader bid on a precious cargo of Shell crude currently on its way to Scandinavia. For a brief four minutes the price hung and then faltered at around $50. Then a rumor swept the floor that a major fleet of minesweepers from the Indian Navy was under escort moving up the Arabian Sea to the strait.

The price of Brent Crude Futures hit $55 in 42 seconds. And by now it was impossible to hear anything above the thunder of the pits as the traders piled in, bellowing bids for any available crude oil already free of the confines of the Gulf of Iran. On a normal trading day, 50
million barrels changes hands in this room. In today’s uproar, almost 30 million were traded in the first 45 minutes. There was only one thing worse than paying through the nose for oil, and that was not having any.

“
PLUS TWO…PLUS FOUR…PLUS WHATEVER IT TAKES
.”

By 11 o’clock that morning the price of world fuel oil had doubled. By the close of trade it stood at $72. Up over 150 percent. No one in the International Petroleum Exchange had ever seen anything like it. In New York, West Texas Intermediate had
opened
at $60 a barrel. Gas oil futures had gone through the roof, and Natural Gas futures, thanks to the exploded
Global Bronco
, were even higher.

1630 (local). Tuesday, May 1
.
The White House
.

Admiral Morgan stared at the pile of data before him. The minesweepers were in action in Hormuz, and there was no doubt the field was composed entirely of Russian-made PLT-3s. So far as the Indian commanding officers were concerned, they were looking at three lines, less than half a mile apart. Inshore on the Omani side, they were in deep water, and it looked as though the same three lines stretched clean across the strait to the Iranians’ Sunburn missile site. Lieutenant Ramshawe had thus far been correct in all of his assumptions.

But now the tasks facing Fort Meade were different. Question One was Where is China now deploying the warships? The Kilos appeared to have disappeared from the face of the earth, but the two frigates that had been flying the national flag of Iran had been picked up by the overheads traveling toward China’s Burmese base in the Bassein River. The
Shantou
had already left there and was making her way toward the Malacca Strait. But of China’s big Sovremenny destroyer there was no sign.

Quite frankly, the Chinese completely baffled the President’s National Security Adviser. For a start, he had no idea what they hoped to achieve by providing the hardware for the Ayatollahs to mine the Strait of Hormuz. Nonetheless they had plainly done it, and the Western world along with Japan and Taiwan, and to an extent South Korea, was presently in deep trouble. The world would run out of oil in a matter of weeks if the Gulf of Iran was not opened up very quickly.

The Chinese obviously thought they were immune to this chaos, and in Arnold Morgan’s opinion they must be taught a very sharp lesson. It might be possible to tweak and irritate the United States, but when you start tampering with the national interest of the world’s one superpower, you might very well end up in deadly serious trouble. Nonetheless Admiral Morgan was determined not to overreact until he could ascertain what the men in Beijing were doing.

Not so the President. He went into a complete dither as world oil prices went into some kind of meltdown, or rather a meltup. Constantly on the line to his Energy Secretary, Jack Smith, he kept asking, over and over, “But what’s this going to mean for the average American at the gas pump?”

As early as midafternoon, answers were coming in fast and furious. And they were all the same. Up, up, and up again, as the big gas-station chains found themselves paying fortunes for every barrel of crude oil on either side of the Atlantic. West Texas Intermediate looked set to close even higher than Brent Crude Futures. And still Big Tex Packard’s mighty tanker blazed alone out in the strait, lighting up the waters. When the gusting wind swung back around to the northeast, it sent a gigantic black oil cloud into the night skies above Arabia.