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A tumultuous week of events in nearly every region of the world has sent oil prices soaring. Russia's most reviled terrorist met his end just ahead of the St. Petersburg G8 meeting, an Iranian-supported militia drew Israel into a two-front war, and China's Wild West may be the final frontier of the worldwide rush for hydrocarbons.

Chechen warlord Shamil Basayev, the commander of Chechen rebel forces who were responsible for the Beslan hostage massacre, was killed by Russian security forces in the days leading up to President Vladimir Putin's big show - the assembly of the Group of Eight leading industrialized countries, which gathered in Russia this weekend.

The successful elimination of a major separatist security threat cemented the former KGB officer and current head of state on his high horse, as he confidently hosted the G8 and used it as a forum to address his energy market concerns.

Putin's podium is well-placed, as the national oil concern Rosneft just launched an IPO on the Moscow Stock Exchange and will float shares on the London Stock Exchange this Wednesday. Though Russia's custodianship of natural gas giant Gazprom has been intensely questioned over the past year, Russia seeks to connect its name not only to invisible gold but to the black kind as well.

Everyone at the G8 seems to agree on the platitudes of energy security, i.e. that energy should be secure. But that does not do much for policy balance between producers and consumers. Putin himself has couched "energy security" in different terms than we have become accustomed to, referring largely to Russia's worry that its supply will be for naught if robust demand and distribution is not maintained.

"Energy is today the heart and core of our economy and we would like our partners to give us access to the heart and core of their economy, but we encounter, time and again, obstacles on the transfer of high technology," he said Monday.

So while western Europeans shimmy and shake to free themselves of Putin's supply clutches (turning even to nuclear power as the favorable option), the man whose name means "sovereign of the world" intends to establish firm supply and demand relationships to squeeze the most rubles from his Russia's resources.

Faraway, So Close!

Relatively far away from the petroleum traps of the Persian/Arabian Gulf, the State of Israel has cultivated natural resources of a different kind. Knowledge-based industries like biotech, information technology, and a robust defense establishment have combined to give Israel its economic well-being.

But events on the Mediterranean's eastern shores can easily ripple outward towards the volatile and resource-rich east. The past two weeks have seen the kidnapping of three Israeli soldiers on two separate fronts, and the expectedly furious response of the Israel Defense Forces that has followed. In the Gaza Strip, which borders Egypt, Qassam rocket fire has persisted despite Israel's unilateral withdrawal last year.

In the north, Lebanese militants who on July 12 kidnapped two soldiers and killed several more have followed up their cross-border raids with heavy salvos of Katyusha rockets into areas of Israel that had heretofore not been hit.

Lebanon's Hezbollah, the Shi'ite Muslim party-cum-army responsible for the raids and rockets, has long derived its financial support and strategic know-how from the Shi'ite run and deep-pocketed Iranian leadership, in addition to the very projectiles Hezbollah is now firing southward.

Iran is the world's #2 oil producer, so the not-so-ridiculous possibility of Israel and Iran coming to loggerheads could send oil prices above $90 per barrel before year's end. However, Israel's operations to this point are painstakingly calculated by a political leadership whose military experience had been cause for concern. Though civilian infrastructure and lives have borne a heavy cost, the halt of weapons from Iran into Lebanon through Syria could avert a direct Israeli hit on Ahmedinejad's domain.

Westward ho!

China has made no bones about its desire to unclog its coastal cities. I once met a Manchurian in an almost entirely Tibetan town, and there are many more transplants throughout the Middle Kingdom and its current territory. As people have moved, so has money and attention, but one thing has stayed put - natural resources.

China's northwest is heavily endowed with mineral wealth and the all-important petroleum China needs to power its economy and people further into the bourgeois world (don't tell them I called it that, but that's what they want!).

But there is resistance among native populations like the Muslim Uyghurs of Xinjiang and the Tibetans, whose autonomous region is, as of this month, accessible via the world's highest railroad. As Han (ethnic Chinese) have surged to the occident, the indigenous peoples have lost political power and been exposed to different ways of life.

China National Petroleum Corporation (CNPC) announced late last week that it would open the Xinjiang Uyghur Autonomous Region to foreign exploration, in order to maximize that region's potential. This is bound to cause more problems among the current inhabitants, though in the major cities the aforementioned Han influx has already stunted the Uyghur percentage of the population.

In the Tarim Basin, China's largest deposit of oil and gas, nine blocks totaling 110,000 square kilometers will be open to foreign companies. We must watch closely to see if the interaction between Uyghurs and foreign oil workers turns into a new Niger Delta nightmare.

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