Is Saudi Arabia working to put the oil squeeze on Iran and help the United States?
Crude oil is the key weapon in the battle between Saudi Arabia, Kuwait, and the UAE, aligned with the United States, against the “Oil Axis” of Iran, Russia, and Venezuela. The Persian Gulf Oil kingdoms fear the emergence of a Tehran-led axis linking Iran, Iraqi Shiites, Syria, Lebanon's Hezbollah, Palestinian Hamas in Gaza, and Islamic militants linked to al Qaeda trying to topple the Saudi royal family.Earlier this month, Riyadh fired the first shot in the war against Iran, by knocking the price of crude oil to as low as $50 per barrel. The goal is to squeeze Iran's budget and wreck havoc on its economy, as much as possible, before the Ayatollahs can get their hands on the nuclear bomb. According to a Jan 24th report in the UK Telegraph, that indicated North Korea is helping Iran to prepare an underground nuclear test similar to the one Pyongyang carried out last year.
Under the terms of a new understanding between the two countries, the North Koreans have agreed to share all the data and information they received from their successful test last October with Teheran's nuclear scientists, to assist Teheran's preparations to conduct its own test, possibly by the end of this year.
On January 24th, the Saudi All Share Index (SASI) closed below the 7,000 level for the first time in two years, and has yet to confirm a bottom. The specter of a nuclear armed Iran is sinking SASI, but we are also reminded that SASI has been a good leading indicator for the price of crude oil for the past three years. Saudi Arabian Oil Minister Ali al-Naimi said on Jan 24th, he aiming for moderate oil prices but did not give an actual price level which he considers to be moderate. Saudi Arabia's spare crude production capacity is set to rise to 3 million barrels per day (bpd) in February and could put a ceiling over crude oil, if it chooses to do so. In the event of an embargo on Iran's daily oil exports of 2.4 mil bpd, Riyadh could fill the gap from its spare capacity.
To counter the Saudi inspired plunge in oil prices, Iranian President Mahmoud Ahmadinejad proposed on Jan 21st, to cut the oil price on which the next Iranian budget is based to $33.70 per barrel for the year starting in March, compared with what he said was a price of $44.10 for the existing budget. “It is a signal to Iran's enemies saying we are ready and we will manage the country even if you lower the oil prices more. We assume our enemies want to damage us by decreasing the price of oil. So we must reduce our dependency on oil revenue,” Ahmadinejad said. (read more at The Market Oracle)
Experts believe that Saudi Arabia is very concerned about conditions in the Middle East and is getting more public in it's support of Sunni groups in the region. Sunni-led government in Lebanon, Sunni groups in Iraq, meeting with Hamas and Fatah and even meeting with Israel.
The process is shaping up as a counteroffensive to efforts by Iran to establish itself as the regional superpower, according to diplomats, analysts and officials here and throughout the region. Some even say that the recent Saudi commitment to temper the price of oil is aimed at undermining Iran’s economy, although officials here deny that.“We realized that we have to wake up,” said a high-ranking Saudi diplomat who spoke on the condition of anonymity because he was not authorized to speak to the news media. “Someone rang the bell, ‘Be careful, something is moving.’ ”
The shift is occurring with encouragement from the Bush administration. Its goal is to see an American-backed alliance of Sunni Arab states including Saudi Arabia, Jordan, Lebanon and Egypt, along with a Fatah-led Palestine and Israel, opposing Iran, Syria and the radical groups they support. [snip]
The Saudi effort has been taken in collaboration with its traditional Persian Gulf allies and Egypt and Jordan, ... (source)
Recently 'Saudi Arabia sent a high-profile envoy, Prince Bandar, to Tehran to study efforts being made in Iran to defuse crises in Iraq and Lebanon and Iranian nuclear negotiator Ali Larijani also made a recent visit to Saudi Arabia, reportedly to seek the Saudi monarch's help in easing tension between his country and the United States over Tehran's nuclear program:
One Saudi official told The Associated Press last week that Iran has asked the kingdom to ask the Americans to tone down their verbal attacks on Iran.Saudi Arabia, in turn, has asked Iran to pressure its allies in Lebanon to work with the government of U.S.-backed Fuad Saniora, and in Iraq to rein in Shiite militias, according to the official, who spoke on condition of anonymity because of the sensitivity of the issue.
It's unclear what Saudi Arabia's ally, the United States, thinks of the diplomacy. [snip]
``I'm sure the Saudis are getting the green light from the Americans to talk to the Iranians,'' said Saudi professor Khaled al-Dakhil. (Hindu News)
Image compliments of The Market Oracle, who has a fantastic article, great graphs on Middle East oil. I suggest you go read it all here.
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DonPato, thanks so much for your comment, and you may be right. They have their own motives and the money to back them up. We will just have to see. Maybe you could give us some more insight.
Posted by: Debbie | February 07, 2007 at 08:03 AM
I’m sure the Saudis have the money to make it “look” like they are helping the U.S. A far as Iraq is concerned they will keep pouring billions of petro dollars into that country to keep the Iraqis fighting amounts themselves.
DonPato
GaySaudiNetwork
Posted by: DonPato | February 07, 2007 at 01:21 AM
"Someone rang the bell, 'Be careful, something is moving.'" ...
LOL, I wish we could borrow that bell and stick it in the Senate! ;)
Seriously though, Debbie, I think you make a great point. We didn't get to this point in history overnight and it may look like only "baby steps" - but at least they are steps in the right direction.
Posted by: Christi | February 06, 2007 at 02:41 PM
I know Angel, I posted on the arrests, prison sentences and 'lashings' yesterday. Saudi Arabia has a long way to go, but if they are doing SOMETHING to help out with Iran, that's got to be a good thing. Baby steps.
Posted by: Debbie | February 06, 2007 at 02:10 PM
hey Debbie..sorry I would never trust the Saudis..they just whipped "foreigners" for mixed dancing in their country yesterday!..heaven help us all!
Posted by: Angel | February 06, 2007 at 02:02 PM