The Saudis are trying to curb Iranian and Russian adventurism and nukes in their neighborhood by bankrupting them. Who says that Obama never (accidentally) did anything good?
But oil speculators operating on their own accounts do not cause the Kremlin to put Holy Mother Russia on the rack of multi-point daily interest rate increases, causing large protests and some public disorder. This is a Saudi move that has ramified very seriously in Russia, far beyond its impact on new oil extraction techniques in the U.S.
If a $50 price is reached and maintained, it would negatively alter but not destroy the economics of heavy oil and probably reduce somewhat shale activity, where reserves are more quickly exploited and harder to estimate than traditional subterranean oil fields, even those that are off-shore. But a Saudi move on this scale, with the resulting self-inflicted reduction in their income, makes no sense for the marginal impact it will have on American future production and imports; it is a geopolitical move targeted much closer to home.
Al-Badri’s flimflam, for which there is much precedent in the history of OPEC (essentially, the cartel is a perpetual quarrel among thieves pretending to be price-fixing), naturally seeks to disguise the fact that Saudi Arabia is trying to discourage the use of Iranian and Russian oil revenues to prop up the blood-stained and beleaguered Assad regime in Damascus, to finance Iran’s nuclear military program, and to incite the continuing outrages of Hezbollah and Hamas in Lebanon and the Palestinian Territories against Israel. The exotic community of interest that has suddenly arisen between the historically Jew-baiting Saudis and the Jewish state is because the countries in the area fear, with good reason as far as can be discerned, that the UN Security Council members, plus Germany, may be on the verge of acquiescing in Iran’s arrival as a threshold nuclear military power. The oil-price weapon, in the face of the terminal enfeeblement of the Obama administration, is the last recourse before the Saudis and Turks, whatever their autocues of racist rhetoric, invite Israel to smash the Iranian nuclear program from the air.
It is perfectly indicative of the scramble that ensues when a mighty power like the United States withdraws, fatigued but undefeated, from much of the world, that Saudi Arabia, a joint venture between the nomadic and medieval House of Saud and the Wahhabi establishment that propagates jihadism with Saudi oil revenues, makes common cause with Israel in a way that inadvertently relieves much of the Russian pressure on Ukraine, which was not an objective in Saudi calculations at all. From the Western standpoint, this is a lucky bounce of the political football. But it is Saudi judgment of its self-interest opposite the contending factions in Syria and the hideous prospect of a nuclear-armed Iran that is discommoding the Saudi leaders, not the ineluctable exploitation by the United States of its own oil resources. It need hardly be added that any conventional definition of “speculation” has nothing to do with it; nor that the Western panic at the bonanza of a $500-billion reduction in the West’s energy costs or the obdurate failure of most Western commentators to understand the implications of the oil price reduction, are an unflattering reflection on the financial and political acuity of the pundits of our society
http://ww2.nationalpost.com/m/wp/blog.html?b=fullcomment.nationalpost.com/2014/12/20/conrad-black-the-saudis-believe-the-the-west-is-about-to-give-in-to-iranian-demands-crashing-the-price-of-oil-is-how-it-fights-back
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