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Is Saudi Arabia Ready to Play Hardball with Iran?

[Foreign Policy] John Hannah - Are the Saudis prepared to constrain oil prices to weaken Iran? Saudi output has increased almost 300,000 barrels per day since earlier this year, a strategy that has the side benefit of pinching Iran. While the Saudis in 2009 require an average oil price of about $51 a barrel to cover their budget, Iran needs an average price in excess of $90. If the price holds steady at the Saudi-designated range of $70-$80 for the rest of this year, the Saudi treasury could come in with a slight surplus. The Iranians, by contrast, have reportedly been forced to consider phasing out food and energy subsidies in an attempt to battle their looming fiscal problems. There's no doubt that Saudi King Abdullah views Iran - and the near-term prospect of its acquiring nuclear weapons - as an existential threat to the House of Saud and its position in the Islamic world. In this regard, Abdullah no doubt perceives Iran's involvement in Yemen as the latest maneuver in a grand strategy whose ultimate target is the kingdom itself.
2009-11-19 06:00:00
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