Sam Ghandchiسام قندچيSaudi Cheap Oil to Keep US in Iraq and Syria
Sam Ghandchi
http://www.ghandchi.com/842-saudi-oil-english.htm


نفت ارزان سعودی برای نگهداشتن آمریکا در عراق و سوریه
http://www.ghandchi.com/842-saudi-oil.htm

 

By now everyone knows that Saudi Arabia has been driving oil prices low in the last 6 months, but the common belief today sees their motif to keep and gain market share at the expense of Shale oil producers in the U.S. who are heavily dependent on junk bonds and can end up bankrupt (1).

 

Some analysts think Saudi Arabia is doing all this to put pressure on Iran and Russia. T. Boone Pickens who knows fracking well acknowledges that Saudi has the cash reserves to sustain this revenue loss for ten years. But Mr. Pickens thinks the rest of OPEC and Russia do not have such deep pockets and will react (2).

 

Although the competition with Shale oil is real but Saudi may benefit from Shale oil more than the US.  Putting pressure on the rest of OPEC and Russia is also true but nothing new. They compete and cooperate. And the ability of Saudi Arabia to sustain revenue loss for ten years for a higher goal is true, but Saudi's higher goal is something else!

 

Saudi saw that the US did not get involved in Syria after the experience in Libya. In other words when the war escalated in Libya, oil prices went up in the US and the military involvement scared the public opinion in the U.S. (Interesting to note that it was not a long ago and Shale oil production has not changed much since that time.) It was a lucky ending that Gaddafi lost power quickly before US face another era of anti-war movements. US avoided direct involvement in Syria which was the next hot spot in the Middle East. Thus Saudi and Qatar had to go alone to fight Bashar Assad and Iran's proxies in Syria. They did not succeed. Instead they ended up with another problem, namely ISIL on their hand (3).

 

Saudi sees the US presence in Iraq and Syria as the solution to its situation in the Middle East. US can shield it from Iran pressures and also can fight in Syria with ISIL and put some kind of an end to Bashar Assad the same way Nouriel Maleki's government was changed in Iraq. The only thing that could stop US involvement in Iraq and Syria would be the rise of oil prices which immediately affects US public opinion against any such military involvements. Saudi's by keeping the oil prices low so far have prevented any such eventuality.

 

Saudi Arabia does not mind US working with Iran to get rid of ISIL or to modify the government in Syria. As long as US presence is strong in Iraq and Syria, Saudi feels protected and is ready to pay for it and has been paying for it in the last six months by making oil the cheapest in a long time. Of course, this strategy has many other side effects that are not necessarily intended by the Saudis, or are not their concern.

 

 

Sam Ghandchi, Editor/Publisher
IRANSCOPE
http://www.ghandchi.com
http://www.iranscope.com
December 5
, 2014
 

Footnotes:

 

1. Oil prices plunge. Is a shale bubble bursting?
http://www.csmonitor.com/Environment/Energy-Voices/2014/1203/Oil-prices-plunge.-Is-a-shale-bubble-bursting

 

2. Oil tycoon T. Boone Pickens predicts return to $100 a barrel
http://www.marketwatch.com/story/oil-tycoon-t-boone-pickens-predicts-return-to-100-a-barrel-2014-12-02

 

3. Saudi Committing Shah's Mistake
http://www.ghandchi.com/823-saudi-shah-english.htm

 

 

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