We wrote the other day about the stunning announcement that Saudi Arabia is going to increase is oil output by 40% in a mere two years and double refining capacity. By doing so, Saudi Arabia would appear to put itself once again in the position of controlling the price of OPEC oil — over and against Iran and Venezuela, among others. One wonders for just how long such an increase in production is sustainable by Saudi Arabia. Is it not possible that such a dramatic increase in production might have a disproportionate impact on the decline curve of certain oil fields’ lives?

Perhaps we’re wrong, but it is hard to look at this increase — on such an accelerated schedule — as simply a business decision. Rather, it seems to us that Saudi Arabia is putting itself in a position to eliminate or reduce the blackmail capability of Iran, and at the same time to put itself in the position to punish Iran and other countries in the coming Sunni / Shiite battle for dominance in the Islamic world. Does the timing of Saudi Arabia’s announcement have any significance, we wonder, coming just as the UN economic sanctions against Iran are producing real pain and unrest in that country?

And what diplomatic price might Saudi Arabia want to exact from the US and the West for the economic warfare it appears to be waging on Iran — warfare not only in Saudi Arabia’s own interests, but in those of America as well?

This entry was posted on Tuesday, January 23rd, 2007 at 6:34 am and is filed under General, Iran, business. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.