Why is Saudi Arabia using oil as a weapon?

Posted: December 4, 2014 by gamegetterII in Uncategorized

A recent meeting in Vienna, between the member states of Opec finally uncovered what the world had expected for months.

Saudi Arabia is playing politics with oil, forcing Opec to maintain its current production levels at 30m barrels per day, to force down the price.

Consequently oil prices have fallen 35% in 2014, tipping under the $70 mark for the first time since May 2010.

The question is why the Saudis would risk the goodwill of other Opec members, simultaneously emasculating the organisation and undercutting their ability to use it in the future to serve their interests.

It is a game of high-stakes poker and in the long run will cause the Saudis some harm, but that is not where their immediate thoughts lie.

Since the first oil shocks following the 1973 Middle East War, the Saudis have understood the role they can play in regional and world affairs by turning the taps on and off.

But recently, as the US upped its production, it would have been reasonable to assume that Saudi would have correspondingly cut surplus supply to maintain a healthy balance sheet.

But instead Riyadh has done the opposite.

From Riyadh the world looks a grim place, and the Saudis have a host of concerns that they feel are not being addressed adequately, either by their allies in the West or by their partners in the region.

Saudi-Iran tension

Many experts talk of a Cold War between Saudi and Iran, where on every major issue of regional concern an Iranian gain is viewed by the Saudis as a loss, and for the House of Al Saud alarm bells are ringing.

In their view the US has effectively caved in, and allowed Iran off the hook.

The Iranians were not supposed to be allowed any domestic uranium enrichment capacity, let alone get paid $7bn for the privilege.

http://www.bbc.com/news/world-middle-east-30289546

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