Why is Saudi Arabia doing this NOW? Maybe because Obama stabbed the Saudis in the back by making a deal with its mortal Shiite enemy, Iran, that will allow the Ayatollahs to continue to build their nuclear bomb.
Earlier, the West had imposed sanctions on Iran to hurt its economy and therefore stall its nuclear program. However, Obama has now lifted those sanctions.
Also, for years the Saudis, like the rest of the world, had believed that the U.S. and/or Israel would destroy Iran’s nuclear facilities with air strikes. Remember Bibi Netanyahu’s Red Line? But for some reason, Bibi has turned, if not into a chickensh**, at least into a chicken.
So there stands Saudi Arabia, alone — like the British during the Blitz of World War II — and very vulnerable.
So is it any wonder that the Saudis would try to destroy Iran with their own version of sanctions — lowering oil prices until Iran’s oil-dependent economy — much poorer than Saudi Arabia’s — collapses, or at least has to stop its centrifuges from running?
And how much is Saudi Arabia suffering from lower oil prices? Not much if it hedged its sovereign investments by buying stock in airline companies (American Airlines, up 30% since August, or by loading up on U.S. dollars which trade inversely to the price of oil).
If bringing America’s fracking companies to their knees is the Saudis’ main objective in keeping oil prices low, it won’t be long before its goal has been reached and the situation can reverse itself. However, if the Saudis are determined to destroy Iran and its Ayatollahs, we could be in for a long siege.
In which case, the airline stocks will be flying into the stratosphere and so will their investors. American Airlines (symbol: AAL).
Good analysis. I suspect the Saudis have “cooperated” with behind the scenes US international political interests on more than one previous oil price drop.
Well said. One quibble, the Saudis are trying to bring Iran around to their own side, meaning cooperation vis a vis Syria, Lebanon, and Iraq, followed by the capitulation of Turkey, currently the third big regional power (not counting Israel, which is in a league by itself).