Saturday, May 2, 2015

By Keeping the Oil Price Low, Saudi Arabia Has Been Targeting Not Only Iran and Russia, But Also USA and Some Giant Western Oil Companies.

Briefly:

In the beginning of this process, some western pundits enthusiastically & happily welcomed Saudi's act in this matter by claiming that by keeping the oil price at low level, Saudi Arabia has decided to crush the political system in Iran and Russia due to the various conflicts in the Middle East including the Syrian civil war. This move, as the western pundits claimed, would also put an extra pressure on some adversary American Latin countries such as Venezuela and Brasil. What the western pundits did not deeply pay attention to it, at least in the media outlets, was the negative long term impact of this move on the giant western oil companies and most importantly on the price of oil shale and the U.S. as a country that has the largest deposits of oil shale in the world (Green River Formation).

Due to the chaotic foreign policy, double standard and weak responses of Obama administration and some EU countries with regards to various conflicts in the Middle East, Saudi Arabia and some of its close allies in the region, have been trying to use one of their powerful leverage, i.e. oil, in order to put an extra pressure not only on Russia and Iran but also on the USA and some EU countries. This process would highly likely continue in the future as well up until the moment that it causes massive unemployment in the oil & gas sectors of the western countries; it continues up until the moment that extracting and retorting the oil shale would become a very expensive and consequently an impossible process for the U.S. and American oil companies.

Note: Saudi Arabia would continue with this policy as much as it can; unless the country would observe a fundamental shift in the foreign policy of the USA and some EU countries with regards to different conflicts in the Middle East and North Africa. Should this happen, Saudi Arabia and its close allies would stable the price of crude oil in the international market much better than current situation.

In the long term, the western countries would lose much more than Russia and Iran in this oil proxy war due to many factors, for example, the higher price of labor, the existence of powerful labor union, various civil society movements, and NGOs, etc in the West. Although the political systems in both Russia and Iran are mainly depending on oil revenue, but massive unemployment in one or some oil & gas sectors would not cause a serious problem in these countries due to the severe lack of democratic institutions, powerful labor unions, NGOs and civil society movements. On the contrary, such an event, would cause a serious problem in the USA, UK, France, Norway and some other western democratic countries. This problem, however, is easily solvable by changing some policy with regards to various conflicts in Ukraine and other parts of the Middle East.


M. Sirani                                      02.05.2015