Tuesday 29 March 2016

Saudi policy has delineated the limits of its power.

This is really interesting in the FT today. Amongst a raft of dull domestic stuff is this piece on the fall in Saudi Arabia's market share in many of its key markets, including China, South Africa and Europe.

All under big pressure from Russia, Iraq and soon to be Iran.

No wonder in January Saudi Arabia agreed to hold production in discussions with Russia. Since then the oil price has bounced from around $30 per barrel to around $40 per barrel. This is somewhat of a goldilocks zone currently as it is still well below shale oil costs but enough for the petro states to exist without defaulting or getting into debt.

It does show that Saudi Arabia is at the limits of its powers today; withdrawing from a poor battle in Yemen, unsure who to support in Syria and now roundly hated worldwide for exporting Wahhabi Islam.

30 years ago the Saudi/US team was able to easily dominate the world, maybe even 20 years ago. But no longer. This is no bad thing given the ludicrous uses to which Saudi put its petro power; the it is another sign that the world is becoming more multi-polar in orientation.


DtP said...

I guess this is what we've wanted though, isn't it? I've been like a broken record hoping for China to pull its fingers out on the world stage and, even though it's only done so commercially and through self-interest, it's better than their prolonged isolationism.

These cash rich, culture poor middle eastern countries have totally taken the mickey and Blighty has been so complicit through the Al-Yammama deal and the sharing of 'intelligence' that sometimes you look at foreign policy and think 'what the hell?'

Sure, it could be a harbinger of scary times ahead but we've been involved in a religious civil war ever since the 1920's effectively and it endless perpetuity hasn't resolved anything in 100 years except turning Israel into a police state in a quest for survival.

All in all - gets popcorn! (Perhaps a little flippant but not so much).

CityUnslicker said...

DtP - Pretty much yes, no tears for Saudi getting a dose of its own medicine from its frenemies!

What a multi-polar world will be like I am not sure, sadly I have a big hunch it will be a lot less safe than before. Just look around today at the wards and terror everywhere since the US elected first Bush and then Obama.

James Higham said...

Dull domestic stuff. What about Yellen's move? Also, will the B of E deliberately do down the pound following Brexit?

Anonymous said...

Oliver Kamm, good old doctor Pangloss. on a mission to lie at his loudest!

In the Times, telling the world that the fundamentals of the €zone are sound!
And that, the €zone is coming out of its torpor!

GDP rising figures for Spain and Oirland - from a somewhat low base - innit Ollie? Then AND get this - Greece is doing well paying back its loan interest.....OK, um right.

Alle ist wunderbar? Thus, the EUzone goin' great mate and everything is just dandy.

Whoa there hoss!

BUT............ NO mention funnily enough of deflation and QE and that the Draghi shell game will come unstuck - eventually and not to forget the little local difficulties in the now defunct Schengen area and a mass movement of migrants...........

Kamm's head firmly stuck in the sand, he must know Osborne.


When Iran finally gets its act together and invades the southern nutters, the Sunni half will decamp to Europe and particularly its little Caliphate - in London.

Anonymous said...

the Sunni half will decamp to Europe and particularly its little Caliphate - in London

With no access to the oilfields' revenues they won't be able to afford it, unless they get a living wage from someone.