Tuesday, August 11, 2015

Can Anybody Play the Reset Game?

The Saudis have taken the lead in depressing world oil prices in order to harm Iran's finances. This also takes down Russian financing, too, adding to the price of sanctions to increase Russian problems. This policy, however, costs Saudi Arabia money, but they have figured the price is worth it. Perhaps the Saudis figure differently since the Iran nuclear deal.

This is interesting:

Saudi and Russian foreign ministers, Adel al-Jubeir and Sergei Lavrov, will meet in Moscow on Tuesday to discuss global energy markets and the Middle East crisis, including the war in Syria and the threat of Islamic State, Russia's foreign ministry said.

I suspect oil prices will be high on the agenda, since agreement on Syria is likely to be minimal.

Russia wants oil prices higher so their Ukrainian adventure doesn't harm them as much as it has been. Russia could make much more money with higher energy prices.

Perhaps the Saudis figure that since President Obama opened the money spigot to Iran by lifting sanctions, why should Saudi Arabia pay the price for keeping Iran's oil earnings low?

And since this nuclear deal makes the Saudis worry about the level of our support for Saudi Arabia, getting some Russian backing as the price for reducing Saudi oil exports to raise the price of oil makes sense for Saudi Arabia as a Plan B for resisting Iran.

Until the Saudis get nuclear weapons to match Iran.

In Washington, Secretary Kerry would defend this as the fruits of American "smart diplomacy."