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July 12, 2012 No.
4830

Al-Arabiya TV Director-General: Saudi Arabia Has Beaten Iran In The First Round Of Oil War

On July 11, 2012, 'Abd Al-Rahman Al-Rashed, director-general of Al-Arabiya TV and former editor of the London-based Saudi daily Al-Sharq Al-Awsat, published an article claiming that Saudi Arabia has beaten Iran in the first round of the "oil war." Al-Rashed says that, despite its threats to close the Hormuz Strait in response to sanctions, Iran has turned out to be a paper tiger: not only has it failed to close the Strait, it has announced it will not close it. However, Al-Rashed estimates that this was only the first round of many in this conflict, and states that there is no way to predict how Iran will respond to the mounting pressure on it. This country may grow more docile; alternatively, it may employ its ultimate weapon of launching a war on its neighbors.

The following are excerpts from the article:[1]

"Perhaps we did not notice [our victory] because we were in the midst of a global campaign with unforeseen political, security, and military consequences. All the military forces in the Gulf – Arab, American, and Iranian – have been and still are on maximum alert. The reason is that the war over Iran's oil export has already begun.

"It seems that the first round of this war has already been decided, and it is probably [the first] in a series of battles between the two big oil exporters – Saudi Arabia and Iran. Saudi Arabia continued [oil] production, while ignoring Iranian warnings not to fill the oil vacuum [created by the embargo on Iranian oil], and Iran did not dare to block the Strait of Hormuz or attack Gulf oil facilities, as it threatened to do.

"One week ago, the Western embargo on Iranian oil came into effect, and the price [of oil] did not skyrocket to $200 a barrel. The Iranian leadership hoped that it would, which would have forced the world to forgo the weapon of [banning] Iranian oil exports. [But, in actuality,] the exact opposite happened. Even before the embargo [came into effect], the price of oil dropped by some $10, to around $90 a barrel. The price later rose again, but not to its former level.

"It is no secret that oil prices would not have stabilized had the large oil exporters not decided to fill [the gap left by] Iran's [missing] oil barrels. Despite repeated threats by Iranian officials against the largest exporter, Saudi Arabia, and even though Iran threatened the world with chaos in the oil market, there was [actually] an oil surplus. Unfortunately for the Iranian president, global stability was maintained and oil production did not significantly decrease in any oil field. Even the reports that Iraq had stopped loading oil in Basra did not affect the market. [In fact,] Iraq renewed its exports two days ago, shipping out 1.5 million barrels of oil.

"The oil war currently raging has exposed two facts. First, that the Gulf states are able to resist the Iranian patron, who warned them to not increase oil production. It should be mentioned that the increase in production was within the boundaries of OPEC's official quotas. The second [fact that has been exposed] to the world is that Iran is a paper tiger. Over a year ago, this country threatened that, if its oil exporting rights were revoked, it would close the Hormuz Strait in self-defense and bring down the market over everyone's heads. [But today,] not only has Iran backed down from this threat, it has officially announced to the world that it does not intend to close the Strait [of Hormuz] – because it knows that, if it does, it could face a crushing military defeat.

"Instead, Iran has adopted the policy employed by the Saddam [Hussein] regime during its oil embargo – namely provocation by deception. [Iran] announced [recently] that it has purchased many oil tankers and is preparing to sell its own oil on the market. This, after international tankers refused to transport its oil because their insurance companies had stopped ensuring tankers carrying Iranian oil. However, even this attempt to find a solution... is bound to fail. Kenya, for example, announced [recently] that it has withdrawn from its intention to buy 80,000 barrels of Iranian oil, after Europe implied that such a purchase could leave it open to economic sanctions.

"Even before that, the central banks in the U.S. and Europe announced that they had begun banning the use of dollars and euros for Iranian transactions, which makes it difficult for the Iranian regime to trade with the world, including with major markets like China and India.

"We are at the heart of a unique campaign, waged by means of dollars, euros, insurance companies, and, of course, the naval attack force stationed off the shores of Iran. Iran's export capacity has diminished by over one million barrels – more than a third of its export capacity before the embargo – and it will diminish even further in the future. The revenues will diminish accordingly, which will undermine the regime domestically. All this could turn [Iran] into a moderate country, or, [alternatively,] into an aggressive country that will use its ultimate weapon of launching a war against its neighbors. That is why I said this was [only] the first round, because it is hard to predict what Ayatollah Khamenei's generals will do when they are starving."


Endnotes:

[1] Al-Sharq Al-Awsat (London), July 11, 2012.