This video connects a few concepts to the possibility of US war with Iran that should be getting more attention. It’s quite well known that Saudi Arabia dislikes Iran, and wants the US to confront that country. But we rarely dive into why that may be. A lot of time and effort is put in to the Sunni vs. Shia myth, something I’ve dismantled elsewhere. When we want to blame religion, it’s almost always politics that’s really to blame.
And when politics are screwing something up, it’s very often economics at the bottom of it as well. That’s certainly the case for the Saudis enthusiasm for US war with Iran. This video lays out how directly this is linked to the price of oil. Simply put, war with Iran could be an economic bonanza for Saudi Arabia…
Video Transcript after the jump…
Hey there. Following last week’s attack on two oil tankers in the strait of Hormuz, Saudi Arabia is eager for a US attack on Iran, whether or not Iran did it. But after a year of “Maximum pressure” There isn’t really any further for the US to go without killing people. In essence Saudi Arabia is calling for a war. This makes sense, because at this point, a US war with Iran is Saudi Arabia’s only hope. This is not about that mythical eternal hatred between Sunni and Shia, it’s about dollars and cents.
For a couple years now, I have been emphasizing something that most media steadfastly ignores. Saudi Arabia is nothing without a robust oil market, and for the past 5 years now that market has not been providing enough money to keep the current system going long term. Many are aware that Saudi Arabia has purchased a US president, but few acknowledge how important the oil price is to his US-Saudi foreign policy. In a video called “Trump is the OPEC President”, linked at the end of this video, I documented the way that the Trumpers have been working down a check list of the world’s greatest oil producers, disrupting their production in a desperate attempt to drive up the price. These actions are a lot more important to Saudi Arabia than the Yemen and Khashoggi cover ups we spend so much time talking about.
This effort to prop up prices has failed almost completely. Estimates vary, but most think the Saudi government needs oil to cost AT LEAST 80 dollars a barrel to come close to breaking even. This has only been the case for around 30 days out of the past five years. Even Today, after the full implementation of Iran sanctions, the destruction of the Venezuelan oil industry, the restart of civil war in Libya, and attacks on oil tankers, Brent Crude can’t make it out of the low 60s. War with Iran is Saudi Arabia’s only hope. Without it they’re finished… by 2030 if not long before.
If War breaks out between the US and Iran it’s not actually Iranian production that the Saudis would hope to crush. Donald Trump has already given them that. No, the true targets would be the 7 million barrels of oil produced every day by Iraq and Kuwait.
I have tried before, but its impossible to predict exactly how war between the US and Iran would go. One thing we know for sure is that the Strait of Hormuz would be blocked by flaming wreckage almost immediately.
This strait is tremendously important to Saudi and Iranian oil exports, but it is also very important to Iraq and Kuwait. And alone out of these four countries, saudi Arabia has a robust pipeline network and high volume ports outside of the Persian Gulf and in its own country. Kuwait and Iraq have access to land based pipelines too, but they go through territories that are certain to be disrupted by any war between Iran and the U.S. The Saudis would be hurt by the loss of transit through the Persian Gulf, but its oil market rivals would be crippled. Oh, and by the way, this is one reason why its silly to talk about world war III here. Russia would make a ton of money out of a US-Iran war as well.
It doesn’t take much to move oil markets. The past years crash in the oil price has mostly been brought about by the addition of just 5 to 7 million barrels of oil a day from Texas. Carving off 7 million daily barrels from Kuwait and Iraq would make a tremendous difference. I think the Saudis are absolutely right in thinking that this war would give them the spike in prices they so desperately need. But it wouldn’t save them. In fact, I think a war between the US and Iran would accelerate the end of Saudi Arabia not stave it off. And that’s what we will talk about next time.
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