Al-Qaida threatens Saudis, US over execution of militants

Saudi Aramco is the state-owned firm that has exclusive control of Saudi Arabia’s massive oil resources, but on 4 January the kingdom’s deputy crown prince, Muhammad bin Salman, told The Economist that Saudi Arabia was considering the possibility of floating shares in the company, adding that personally he was “enthusiastic” about the idea.

“Verisk Maplecroft highlights low commodity prices as one of the primary drivers of political risk for investors in major producing countries across Africa and Latin America, while the increasing global threat posed by the Islamic State and rising tensions between Iran and Saudi Arabia, are flagged among the foremost geopolitical risk multipliers”, the consultancy said in the report.

Oil is important in the dispute between Iran and Saudi Arabia, whose animosity long precedes the row sparked by this month’s execution of a prominent Shiite cleric.

Police arrested those identified as being involved in the attack and President Hassan Rouhani condemned the move afterwards. This wins big points at home, while also ensuring Saudi Arabia’s dominant position as chief regional influencer. The Advisor informed the Committee that Saudi Arabia is a close friend of Pakistan. “Saudi Arabia barred its citizens from traveling to Iran, but sport has nothing to do with politics”.

“Thus, we should expect short term volatility in oil prices, medium-term stability and long-term slow increase”, he said. Last week, Saudi Arabia’s foreign minister revealed that it may take further steps against Iran, stating that they “are looking at additional measures to be taken if it [Iran] continues with its current policies”.

Since Western diplomacy has not yet been noticeably affected by the diplomatic break between Iran and much of the Arab world, numerous anticipated effects of the nuclear agreement remain unhampered for the time being. “We look forward to welcoming input from the many expert delegates we have coming from across the world on how to support sectors that can help countries maintain sustainable growth in an increasingly competitive economic environment”, said Al-Othman.

The skyrocketing prices led to a drop in demand for oil. Then there’s the prospect of Iran re-entering the market. Subsidy savings from LPG are included in the gains as it was the lower oil prices that enabled the NDA government to free up the pricing of the cooking fuel.

Already the two rivals have engaged in proxy battles in Yemen and Syria, supporting opposite sides in those wars. The recent crisis, however, has brought about a previously unknown version of Saudi Arabia, one unwilling to reduce supply to balance a massively over-supplied market.

India imported 9.8 million tonnes of crude oil from Saudi Arabia in September 2015, comprising 20 per cent of India’s total crude imports in that month, according to data compiled by CMIE. Larger number lawyers were also present there on the occasion. But despite the glut in global oil production – somewhere around 1 mb/d – the margin from excess to shortage is thinner than most people think.

As a result, even though it remains a remote possibility, direct military confrontation between Saudi Arabia and Iran could well put oil back into triple-digit territory in short order.