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Saudi Arabia Using Oil as an Economic Weapon Against Iran

Saudi Arabia fears Iran's pursuit of nuclear weapons, and may flood the market with its oil reserves to bankrupt Tehran

Saudi Arabia and Iran have been in a bitter dispute over the last several weeks.  Iran successfully blocked an effort by OPEC nations to release excess oil reserves into the market to ease high prices and stabilize the world economy.  In response, Saudi Arabia decided to act against OPEC and release its own reserves.  In no uncertain terms, a bitter feud is brewing between the two oil-rich nations, and Saudi Prince Turki Al-Faisal has stated that the country is in such fear of what may happen if Iran succeeds in attaining nuclear weapons capabilities, that it is considering flooding the market with oil to bankrupt Iran’s government and halt nuclear ambitions.

In a meeting with U.S. and British servicemen at a U.K. airbase, the prince claimed that Saudi Arabia does not want Tehran to attain nuclear weapons, to the extent that the Saudis are willing to completely open their oil reserves to bankrupt Iran.  “We could almost instantly replace all of Iran’s oil production,” stated the prince.  This would equate to roughly 4 million barrels per day.

However, if such an action were to occur, there would of course need to be a naval blockade of Iran’s fleet of oil tankers, which Iran would inevitably view as an act of war.  However, this seems like an unlikely and rather dangerous scenario.  What is more likely to occur is a continued increase in supply coming from Saudi Arabia despite OPEC’s disapproval.  The effect will be a prolonged cut into Tehran’s oil profits.

However, there is still debate whether or not Iran’s nuclear ambitions are even aimed at nuclear weapons development.  An inspection by the IAEA just months ago revealed no signs of weapons development at any of Iran’s proposed nuclear energy facilities, and the country continually claims that its nuclear program is peaceful in nature.  It may be foolish to back Iran into an oil-induced war just to find out in the end—as was the case in the U.S. invasion of Iraq—that there are no nuclear weapons.

By. John Shimkus of Energy Digital


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Leave a comment
  • Anonymous on June 28 2011 said:
    Only these corrupt fat ass regimes can do so. Selling its people asset for cheap in order to counter the only Muslim country that stands up against American-Zionist hegemony in the region. Dirty job Saudis!
  • Anonymous on June 28 2011 said:
    "...an effort by OPEC nations to release EXCESS reserves into the market to..."Come on now John. Puleeze. This is OilPrice.Com, the best site for oil analyses. And the meeting with US and UK "SERVICEMEN". I hope that it was during the day, because they definitely had better things to do at night in 'SWINGING LONDON'.
  • Anonymous on June 30 2011 said:
    Where do you get the idea that Saudi can increase production? I am Reserves Expert and have work in Saudi, Kuwait, UAE on there is not a chance in hell Saudi can increase prodution to crash the oil price, they neither have the infrastructure or the reserves to increase oil production to any large degree, they are basiclly flat out. And OPEC has never had any real impact on the member countries, as each country in OPEC does what they want regardless what OPEC says. Please do not put out statements like this that are nothing more than hear say and has no reality.

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