Here at Classiarius we strongly believe that oil is now an effective weapon that is being used against Saudi Arabia and Iran, hence we talk about it on our platform every two to three weeks.
What strategy or weapon could force Saudi Arabia to make decisions that it would otherwise avoid, while at the same time open admit that OPEC, a cartel in which it has ruled over for decades, is now rendered useless? What strategy or weapon could drive the Iranian economy into recession as sales of its oil production falls? The US overproduction of the highest quality crude oil and then dumping it into global markets is the answer for both questions. The United States has weaponized crude oil and the Saudis and Iranians are under severe pressure as a result.
In the past several years the US has approached all allies and pressured them to stop buying Iranian oil and oil products. When asked what would be the likely alternative, the US offered its highest quality shale oil and natural gas to fill the gap. At the same time, the US has been approaching the top clients of Saudi Arabia globally and has offered the same deal. It goes without saying the Saudis and Iranians are discussing production cuts and recently analysts have warned that OPEC`s 1.2 million bpd cut may not be enough to hold up prices.
What Saudi Arabia, Iran and other producers are concerned about most is the collapse of oil prices as it would wreck their economies.
And it gets worse. Russia and the US have increased production and along with Saudi Arabia, now account for 40 percent of global production. This massive increase in production as pressured Saudi Arabia to focus on itself and less on OPEC. There is no question that OPEC has lost its clout as a group.
Finally, think about the global economic slowdown and Iran getting squeezed out of its position as a top supplier to some major economies. Iran will suffer most and as a result, could be forced to challenge the Saudis diplomatically or militarily. This oil war will cause rivals in the middle east to start focusing on others in their neighborhood.
The US shale boom is disrupting the middle east and all oil producers as it is a WMD – a new and very effective weapon.