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Energy Insights: Energy News: Saudi Arabia in oil-price war with Iran, Russia

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Saudi Arabia in oil-price war with Iran, Russia




F. Michael Maloof

Riyadh avenging Moscow's backing of nemeses Assad, Iran

King Abdullah

WASHINGTON – Saudi Arabia is extending its own international jihad not only through its export of Wahhabism, an extreme form of Sunni Islam.

The Islamic kingdom is now going after Russia, a main backer of the kingdom’s sectarian opponent, Shiite Iran, by targeting its oil production clout to adversely impact the Russian economy.

Sources say the United States might even be colluding with Saudi Arabia to cause a dramatic drop in the international oil price in an effort to punish Russia not only for its support of rebels in Ukraine but for its backing of embattled Syrian President Bashar al-Assad as well as Iran.

The Saudi strategy is to flood the international market to harm the economies of Russia and Iran, both of which need the international price to be above $100 a barrel to break even. The price of oil today is less than $50 a barrel.

Until now, the Saudis and the other members of OPEC, the Organization of Petroleum Exporting Countries, used the level of production to keep oil prices high, with the price peaking at $147 a barrel in 2008.

By maintaining higher oil production and consequently driving down the international oil price, the Saudis hope to recapture market share that it has lost to Russia and Iran, its main competitors.

However, Saudi interest isn’t restricted to economic competition. There also are geopolitical and geostrategic considerations.

In September, Secretary of State John Kerry met with Saudi King Abdullah and worked out a deal that the U.S. would work to topple Syria’s Assad in exchange for Riyadh joining the U.S.-led coalition against ISIS.

In such a deal, the Saudis then not only would topple Assad, a Shiite-Alawite allied with Iran, but also impede goal of its Islamic rival to create a Shiite crescent from Iran to Iraq, Syria and Lebanon.

A proposed $10 billion pipeline that has been in the planning stages since 2011 would help solidify a Shiite crescent. The pipeline would originate in Iran, go through Iraq and Syria, a “predominantly Shiite axis through an economic, steel umbilical cord,” as Middle East expert Pepe Escobar described it.

In addition, the Canadian-based Global Research think tank said Assad in 2009 had refused to allow Qatar, a Saudi ally, to construct a natural gas pipeline from its North Field to go through Syria then into Turkey and onward to Europe.

According to Global Research, this turndown, combined with the proposed Iran-Iraq-Syria pipeline, “ignited the full-scale Saudi and Qatari assault on Assad’s power.”

Even Iranian President Hassan Rouhani has acknowledged recently that the dramatic drop in oil prices has been “politically motivated” and called it a “conspiracy.”

This same political conspiracy also extends to Russia, which has invested billions of dollars in economic and military assistance over the years to Syria and also is a close ally of Iran, where it has built the Bushehr nuclear reactor, with at least two more planned for construction.

Just as the Saudis have been vehemently opposed to Russia’s aid to Assad, Russian President Vladimir Putin has the daggers out for Saudi backing and apparent control over the Chechen jihadi fighters who continue to launch attacks in the country and are providing assistance to the Syrian opposition.

With Saudi manipulation of the oil price, the Russians not only are reeling from this development, but the low prices come at a time when Western sanctions are hitting the Russian economy.

The cumulative effect of these developments are causing the Russian economy to go into recession, prompting Moscow to call on the Russian population to stay calm.

Because Russia has some $400 billion in foreign exchange reserves, it’s in little danger of a total economic collapse, although the Russian private sector which suffer the most impact with its reported $700 billion in debt.

The impact on possible Saudi manipulation of oil prices to impact the Russian economy also is having an effect on Putin’s plan to develop the Eurasian Economic Union, or EEU, in competition with the U.S. and the European Union.

The Eurasia Union now has four countries – Russia, Armenia, Belarus, Kyrgzystan and Kazakhstan – designed to offer a customs-free region that, with the possible addition of other countries in the region, would approximate the former Soviet Union.

Russia had designs of Ukraine also joining the EEU, but portions of the country balked, leading last year to the crisis that prompted the ouster of the pro-Moscow president and Russia, in turn, taking over the Crimea, which historically has been of strategic value for its Black Sea fleet.


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