I’ve long argued that the Saudi-led, years-long effort to keep down the price of oil was supported by America to damage the economies of both Russia and Iran. (Others have argued the policy was a Saudi effort to bankrupt the American shale oil industry.)
But in a November decision, both OPEC and non-OPEC members voted to decrease oil supply, thereby pushing up the price of oil. But the decision doesn’t apply to Iran, which will benefit from increased oil prices without having to cut production.
Saudi Arabia had been paying heavily for the policy, burning through its cash reserves. It was somewhat inevitable that the Saudis would have to drop the policy, especially since Iranian diplomatic and economic isolation has all but ended, thanks to an apparent American reversal of the policy of isolating Iran.Why, I’m sure the Saudis asked themselves, should they continue to pay heavily for a policy designed to isolate Iran, when their chief partners in that policy—America—appeared to want to bring Iran out of isolation.
I wonder also whether Russia, which will also be a big winner from increased oil prices, might have whispered sweet nothings into Saudi ears. What did the Saudis get from Russia that the Americans can’t or won’t provide them with? Something to do with Yemen? Maybe promises of nuclear technology?