Saudi Arabia’s desire for the US to “take out” Iran is probably even greater than Israel’s. From Tom Luongo at tomluongo.me:
While Israel has been the barking dog pushing hostilities against Iran, it is the Saudis that are truly most threatened by Iran’s return to the global economy. They are as much, if not a bigger, agitator for tearing up the Iran Nuclear Deal as Israel has been.
A report earlier this week from the International Monetary Fund argued that Saudi Arabia still needs oil trading at $88 per barrel to balance its budget and pull off the structural reforms the country needs.
Crown Prince Mohammed bin Salman’s Vision 2030 plan, which has the usual suspects in Washington salivating at the prospect of leaching off of, will require a complete make-over of Saudi society. It will likely cost trillions. And the Saudis still have a big budget deficit.
It is set to shrink to a more manageable 7% of GDP this year while expanding government spending by more than 5%.
And the only thing keeping this budget deficit moving lower is, of course, higher oil prices. Last year’s breakeven point was just $70 per barrel. But that rises this year to $88 according to the IMF because Bin Salman has begun the spending associated with Vision 2030.
Now, since the implementation of the Iran Nuclear Deal (JCPOA) Iran’s oil output has risen back to its pre-sanctions level of around 3.8 million barrels per day.
With new exploration and production deals signed by European, Chinese and Russian oil majors Iran’s output over the next few years could easily push over 4 million barrels if not closer to 5 million.
While at the same time Saudi Arabia wants to both cut back on production and its exports to raise the price per barrel to the level it needs. So, it shouldn’t take a genius to see the incentive here to try and bribe President Trump with hundreds of billions in arms sales and promises of fighting Iran in Syria to get him to de-certify the JCPOA and have the deal fall apart.
To continue reading: Saudi Arabia’s Needs Have Become Iran’s Problems