World View: Iran/Saudi Relations Worsen over Yemen and Falling Oil Prices


This morning’s key headlines from

  • Citigroup: Oil could plunge to $20 per barrel
  • Iran threatens oil transports, blaming Saudis for falling oil prices
  • More on the growing Muslim versus Muslim wars

Citigroup: Oil could plunge to $20 per barrel

Iran's Supreme Leader tweets a threat to Saudi Arabia over falling oil prices (Memri)
Iran’s Supreme Leader tweets a threat to Saudi Arabia over falling oil prices (Memri)

After falling during the last year from over $100 per barrel down to below $45 per barrel, the price of West Texas Intermediate (WTI) oil has record to around $52 per barrel. However, Citigroup analysts say that the current price is unsustainable, and that we will soon see oil fall well below $40 per barrel, and perhaps as low as in the $20’s range for a while, possibly triggering the collapse of OPEC.

The reasons for the continuing plunge in oil prices are:

  • The U.S. shale oil (fracking) revolution, with U.S. drillers pumping 9.21 million barrels a day, the most since 1983.
  • The result will be an global oversupply of about 2 million barrels a day in the first half of 2015.
  • U.S. crude inventories expanded to 413.1 million barrels, the highest since records were kept in 1982.
  • Oil supply will probably exceed demand by 700,000 barrels a day in the first quarter and 800,000 barrels a day in the second quarter.

The result is that oil storage is “heading toward the tank-tops,” meaning that storage space is running out, and the oversupply will push prices down substantially. Bloomberg

Iran threatens oil transports, blaming Saudis for falling oil prices

On February 24, 1990, after a drastic fall in oil prices, Iran accused Saudi Arabia of being party to a Western plot against Iran. At that time, Iran and Iraq were still at a state of war, and Iran threatened to confiscate oil shipments to Iraq that pass through the Strait of Hormuz. Iran demanded that the Saudis conform to the demands of the oil cartel OPEC (Organization of Petroleum Exporting Countries).

Two weeks ago, the current Supreme Leader, Ayatollah Seyed Ali Khamenei, renewed that threat by repeating part of it in a tweet, saying that “crashing oil prices… is a blow against Islamic and independent nations,” and promising to “answer a blow with a blow.”

According to a state-sponsored editorial:

“ran, as the center of Islamic awakening, shows tremendous patience in [its] foreign policy… But the anger of this patient element has irreversible consequences for the Aal Saud family and their allies in the region, from Aal Nahyan [the UAE royal family] to Aal Khalifa [the Bahraini royal family]. Beware of the patient ones. Saudi Arabia must not depend on sunny days – on the contrary, it must prepare for a stormy day… The nations of the region will not forget the Arab leaders’ betrayal by means of reducing oil prices, and revenge will be a minimal punishment for this strategic mistake by Saudi Arabia.

Today, all the arteries of oil transport – from Bab-el-Mandeb strait to the Suez Canal and the Strait of Hormuz – are under Iranian control, by means of Syria, Yemen, and Bahrain, and within range of Iranian missiles. If the need arises, the nations of the region will be informed of Saudi Arabia’s and its allies’ despicable collaboration with the Zionist regime…

Iran has recently been bragging that they now have control of the capital cities in four other countries — Lebanon, Syria, Iraq, and most recently Yemen. The Supreme Leader now wants to leverage that control by threatening oil transport throughout the region, in order to raise oil prices.

With the death of Saudi Arabia’s King Abdullah II, and his replacement by King Salman, the Saudis have been indecisive in reacting to the takeover of Yemen by the Iran-backed Shia Houthis. Saudi Arabia has contributed some $4 billion in aid to Yemen since 2011. That aid was largely suspended in December after Houthis took control. Now the Saudis have to decide whether to go further and intervene militarily, which would raise the conflict with Iran to an even higher level.

Iran’s attacks on Saudi Arabia are extremely vitriolic. When the news of King Abdullah’s death broke, an Iranian state-sponsored news agency published a cartoon welcoming him to hell:

Iran cartoon on King Abdullah's death: Left devil: 'Welcome'; right devil: 'The Master in the furnace of hell' (Memri)
Iran cartoon on King Abdullah’s death: Left devil: ‘Welcome’; right devil: ‘The Master in the furnace of hell’ (Memri)

After Abdullah’s death, a top Iranian advisor called on the new King Salman to change policies: “As for King Salman’s desire for an Israeli-Palestinian peace – this is impossible, because the Zionists need to leave the occupied lands…” Memri and Al-Jazeera

More on the growing Muslim versus Muslim wars

I received a number of reader responses to yesterday’s article on Bill O’Reilly’s statistics on Islamic terrorism, and the point that Islam is at war with itself, not with the West. There are no Muslim countries or Muslim armies attacking the West, but there are a number of Muslim armies and militias attacking and killing thousands of other Muslims, including Muslim women and children.

Most of the questions were of the following sort: “Why can’t Muslims be at war with other Muslims AND with the West?”

The answer really is “No.”

It’s certainly true that Osama bin Laden was at war with the West, as were a number of Saudi jihadists. Other jihadists groups would like to be at war with the West, but they’re too bogged down killing other Muslims to attack the West. That’s the point. For example, I’m sure the Islamic State of Iraq and Syria (IS or ISIS or ISIL) would like to wage war against the West, but they will never get the opportunity because they will never defeat all the Muslim armies around them, without a world war. No Muslim army could possibly have the resources to fight other Muslim armies and the West at the same time.

As I have been saying for years, we are headed for a world war where the Saudis will be our enemy, aligned with Pakistan and China, and Iran will be our ally, aligned with Russia and India. It will never be the case that “Islam is at war with the West,” but it will be like World Wars I and II, where we were at war with some Muslim armies and allied with other Muslim armies, and that will be bad enough.

KEYS: Generational Dynamics, Citigroup, West Texas Intermediate, WTI, Iran, Saudi Arabia, Strait of Hormuz, Ayatollah Seyed Ali Khamenei, Organization of Petroleum Exporting Countries, OPEC, King Abdullah II, King Salman, Yemen, Houthis, Bill O’Reilly, Fox News, Osama bin Laden,
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