Saudis Adjust Long-Term Oil Strategy

[Dover]

Saudis Adjust Long-Term Oil Strategy
by Ian Talley Dow Jones Newswires


WASHINGTON Jan 10, 2007 (Dow Jones Newswires)
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.

Iran's alleged aim to develop nuclear weapons and its interference in Iraqi and Lebanese politics and conflicts are feeding fears among the Sunni states in the region, particularly Saudi Arabia, that Iranian ascendancy might tip the balance of power towards a Shi'ite domination of the Middle East.

"Fear of an emerging Shi'a crescent has been reflected in speeches by Egypt's President (Hosni) Mubarak, Saudi princes and clergy, and other Sunni Arab heads of states," says Mordechai Abir, a senior Middle East analyst for Burnham Securities. That anxiety, along with concerns for domestic security, has spurred Saudi Arabia to boost its defense spending to between $50 billion and $60 billion in the next several years for a major upgrade of its entire military.

..snip..

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. ..cont'd

http://www.rigzone.com/news/article.asp?a_id=39941

[Dover]

1. I wonder if China is doing any oil deals with the Saudis?

I know China has contracts with Iran and other countries.