Saudis Adjust Long-Term Oil Strategy

Saudi Arabia’s growing fear of Iranian hegemony in the Middle East may be driving the world’s largest crude oil exporter to prepare a more aggressive long-term political oil strategy that could subvert an Iranian ascendancy, insiders and analysts say.

Under a new, accelerated production program, the kingdom could increase its spare oil drilling capacity to at least 3 million barrels a day
by 2011, up from around 2 million now. Intelligence experts estimate Iran might have the capability to develop nuclear weapons by then. Additional spare capacity could give the Saudis greater leverage as a political tool.
Saudi Arabia has repeatedly said it won’t use oil as a political tool and most experts agree that the kingdom’s power to influence oil prices is currently limited by a tight global market and subsequently thin spare capacity. But recent developments in Saudi Arabia’s plans to boost production, and briefings by a former consultant to the Saudi ambassador to the U.S. have raised questions about whether the country is considering new strategic oil options to counter Iranian influence in the region.

Some analysts say Saudi Arabia is preparing its massive crude oil reserves as its own “nuclear” weapon to undercut Iranian power.

In an opinion piece published in the Washington Post in late November, Nawaf Obaid, previously an advisor to the Saudi government, said the Saudis may consider not only officially funding the anti-Shi’te militias in Iraq, it also might consider strangling Iranian funding of the militias through oil policy. Obaid was fired by the Saudi government for airing his frank insights in the op-ed piece.

Rigzone