It’s being reported that Iran and Saudi Arabia are coordinating their behavior in the oil market in order to raise state revenues. As reported in the NYT, Iran and Saudi Arabia
overcame their differences on Wednesday, with OPEC deciding to cut production next year by about 4.5 percent, or 1.2 million barrels a day. It will be the first cut in eight years.
Any cooperation between these two is amazing given their history.
The article notes quite a few potential hangups regarding their agreement, but the market has already reacted.
With the prospect of less pumping, oil prices, which began rising earlier in the day in anticipation of the deal, were up more than 8 percent, to nearly $50 a barrel.
What makes Saudi and Iran cooperation in OPEC even most ironic? The fact that Saudi Arabia has been one of the most vocal critics of the American lead Iran deal. Read a late 2013 oped written by Mohammed bin Nawaf bin Abdulaziz al Saud, the Saudi Arabia’s ambassador to Britain. He is critical of American Iranian detente as he writes
And yet rather than challenging the Syrian and Iranian governments, some of our Western partners have refused to take much-needed action against them. The West has allowed one regime to survive and the other to continue its program for uranium enrichment, with all the consequent dangers of weaponization.
This year’s talks with Iran may dilute the West’s determination to deal with both governments. What price is “peace” though, when it is made with such regimes?
If Iran is such a treat to peace, why does Saudi Arabia work with the Shiite regime to raise Iranian oil revenue? Because states do not have “friends” but interests. It is in Saudi Arabia’s interest to outsource their security costs to the United States. But it is also in the United States interest to not be so dumb that we fall for it.