The recent drop in fuel prices has resulted in a nice savings at the pump for both consumers and businesses in the U.S. Its also been putting a big boot on the throat of several countries that have been a constant thorn in our side (Im speaking primarily of Russia, Iran, Syria, and Venezuela). Its been a little over 3 months since Secretary of State John Kerry met with Saudi King Abdullah at his palace on the Red Sea. The price of oil was more than $100 a barrel at the time of that September meeting. In the last couple weeks it has actually dipped below $60 a barrel. Financial experts say that these other major oil-producing nations (Iran/Russia/Venezuela/Syria) need the price to be $140 a barrel in order to balance their budgets, keep their domestic government projects afloat, and keep current with re-paying debts. In other words, the enemies of the United States (and Saudi Arabia) are being pushed to the brink of financial crisis, simply by the Saudis willingness to keep production levels high. The Saudis have the ability to control the international economy more so than any other country in the world. And just as the U.S. would like to break the back of Vladimir Putins Russian economy, Saudi Arabia wants to break the back of the Shia money machine (i.e. Irans oil economy). Reuters reported last week that, “The conflict is now a full-blown proxy war between Iran and Saudi Arabia, which is playing out across the region. Both sides increasingly see their rivalry as a winner-take-all conflict: if the Shi’ite Hezbollah gains an upper hand in Lebanon, then the Sunnis of Lebanon—and by extension, their Saudi patrons—lose a round to Iran. If a Shi’ite-led government solidifies its control of Iraq, then Iran will have won another round.” Its fascinating to watch the way the world economy works, and its frightening how much the major economies of the world (and not just the U.S. economy) are affected by the price of oil. And these recent developments underline the fact that, whether we like it or hate it, the most powerful ally this country has is Saudi Arabia...
Posted on: Fri, 26 Dec 2014 15:45:00 +0000