Saudi Arabia is playing hardball with the World

Brent Crude oil April 2015 futures contracts are trading slightly above $60 with humble signs of steady rebounding from the most recent giant slalom of $115 per barrel less than 8 months ago on June 19th, 2014.

Translating from Arabic one of the world’s well known proverb, would be similar to saying “Hitting two birds with one stone”, while Russians would say “Killing two hares with one shot”. And here is why:

  1. Saudi’s Sunni Royal family, backed up by the US administration, are in position to remove Syria’s Assad Alawite regime. Performing “democratic elections” and installing new Syrian President from loyal Sunni clan to rule over the country.
  1. All of a sudden, back in 2013, Russians got involved during the so called “Arab Spring” defending and literally saving Assad’s regime, longtime Soviet ally in the Middle East. Saudi’s “chemical weapons of mass destruction” plan didn’t work out. US had to agree with the Russian proposed chemical disarmament and removal solution, allowing Assad to stay in power.
  1. Neither late King Abdullah nor his advisors, including successor King Salman, Minister of Defense until January 23rd, 2015, were willing to accept this geo-political defeat at the MENA home base region nor did they forget whom to blame and revenge for this loss: Russia and Putin, of course.
  1. Russia is clearly paying high price for Geo-political triumph over Crimean peninsula “return home” and “reunion” with mainland Mother Russia that happen in March of 2014, amidst former Ukraine President Yanukovych dramatic unconstitutional regime overthrow, backed up, once again, by US & EU leadership at this time.
  1. To the surprise of the World leaders and, especially, to Obama’s administration and his European colleagues, neither of whom would anticipate such Putin’s “Crimea annexation” reaction. Imposing sectoral economic sanction on Russia’s Oil & Finance industries, are the only restrictive tactics to be effective in a long run, to be achieved only with Saudi’s OPEC influence and Royal will.
  1. Secretary of State John Kerry visits Saudi Arabia 4 times during 2014 and meets with late King Abdullah on each trip. Both US presidential executive orders 13660 and 13661 were signed on March 6th and March 17th respectively, and further expanded on March 20th, just 4 days before Kerry was scheduled to meet late King Abdulah. Most impressive is that right after 3rd five-day trip to Saudi Arabia on June 22nd, 2014 world oil prices started their declining marathon.
  1. Obama’s administration is willing to sacrifice parts of local US economy, specifically, oil drilling businesses, majority of which are based around Republican states. USA shale oil with its hydraulic fracking industry is under severe hit. Meanwhile Saudis are taking Oil market share back, eliminating all newcomers to the World industry, by exercising predatory practices.
  1. Saud Royal Family is also advancing this moment to cool down peninsula’s Shia population who are heavily settled along the Eastern Oil rich regions. Saudi’s Shia opposition leadership is backed up and closely tied with Iran Shia Government.  Low Oil prices are hitting hard on Iran’s already fragile sanctioned regime, thus re-directing focus from Saudi’s internal Shia opposition affairs into crucial local Iranian oil based economy.

Today’s realm shows that you can hit as many birds or hares as you wish, as long as you are controlling about 32% of OPEC crude oil output.

About the Author
Advises on Middle East affairs, Arab-Israeli conflict and state of Economy. Babson '08 | Russian Presidential Academy '14
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