Published On: Tue, Mar 31st, 2015

Unforeseen Consequences of Iran Nuclear Deal: Saudis Seek Own Bomb, May Let Oil Drop to $25

Over in Riyadh, they must be going out of their minds imagining what the same conflicts would look like should the region's chief aggressor, Iran, also own a few nuclear devices it could hold over their heads—literally.

Saudi - Pakistan joint military exercise

It appears that Israeli Prime Minister Benjamin Netanyahu is not the only one terrified by the prospect of a nuclear Iran. Its neighbor Saudi Arabia feels it has even more to lose from such a prospect, and has been taking steps to face the new threat.

“With the approach of a self-imposed Tuesday night deadline for the framework of a nuclear deal between Iran and the Western powers, the talks themselves are already changing the dynamics of regional politics, ” the NY Times wrote on Tuesday.

The Saudis, which have the most to lose from an even stronger Iran at their door, are already leading airstrikes against Iranian-backed rebels in Yemen. They’re financing the jihadist war against the unholy axis of President Assad, Hezbollah and Iran. And they’re desperately urging the U.S. to abandon, or at least not sound so damned excited about their bizarre pact with the Iranian-backed Iraqi troops fighting the Suni Islamic State.

Over in Riyadh, they must be going out of their minds imagining what the same conflicts would look like should the region’s chief aggressor, Iran, also own a few nuclear devices it could hold over their heads—literally.

Saudi Arabia is not going to wait quietly while the Western powers are working on a deal which, judging by the history of such agreements with despotic regimes, will be unenforceable. It has at least one client state, Pakistan, which owns and operates a nuclear program and, for the right price, will make one for its Saudi benefactors.

Jamal Khashoggi, the U.S.-educated Saudi journalist and editor-in-chief of Al Arab News Channel, told the Times: “Taking matters into our own hands is the name of the game today. A [nuclear] deal [with Iran] will open up the Saudi appetite and the Turkish appetite for more nuclear programs.”

Meanwhile, Khashoggi suggests “Saudi Arabia is moving ahead with its operations to pull the carpet out from underneath the Iranians in our region.”

JBN, like everyone else in the business, reported Monday that oil prices were falling hard in anticipation of an Iran deal, as traders were doing the math and figured, sanctions will be lifted and Iran would soon be flooding an already sinking market with its crude oil exports.

But Wayne Arnold, writing for Baron, says “traders are looking at the wrong producer.” The glut is not being fed by a speculation regarding Iran, but by real, present flooding by Saudi Arabia.

The Saudis don’t believe the deal will stop Iran’s nuclear program, nor do they believe they can expect much help from the Obama White House. So what they’re doing instead is try to impoverish Iran even before the West has lifted the sanctions. The Saudis are letting crude prices slide lower and lower, so that by the time Iran starts selling it would be facing a buyer’s market.

“How low?” Arnold asks, and answers: “How about another 50%, to $25 a barrel?”

The era of $20-something oil is coming, says Arnold.

Mind you, the Saudis are hurting themselves as well in the process. They, too, are facing heavy budget deficits, as do the other Gulf states. The fact that they’re willing to make these sacrifices should attest to their level of alarm at the Iranian threat.

Someone in Lausanne should pay attention.

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