Saudi Oil Price War Forces Iran to Cut Hezbollah Aid

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How bad are things under Obama? So bad that the Saudis are taking the lead in dealing with Iran. Their particular form of Iran sanctions are a bit roundabout but sit well with anyone who drives a car.

The Saudis are using cheap oil to wreck Iran’s economy and discourage American energy exploration. The latter doesn’t seem to be working too well, but the former sure is. (via Religion of Peace)

The Iranian regime has slashed its funding of terrorist groups in the Middle East after its budget was hit by a plunge in oil prices.

The regime is now allocating 25 per cent less to Lebanese Hezbollah and other paramilitary groups dependent on the clerical regime for their cash-flow, Kuwaiti newspaper al Qabas said.

A sharp drop in oil prices from $140 a barrel to around $75 a barrel was cited as the main reason for the cut in spending on groups that Iran pays to meddle in the region.

Experts now predict that plunging oil prices could send the Iranian economy spiralling into even deeper debt next year.

Unlike Obama’s useless sanctions, the Saudi approach is cleverer because it devalues Iranian exports. Unlike sanctions, there’s no point in smuggling out anything when you’ve devalued the entire product. The Saudis have the resources, the deep pockets and the network to do something like this and while it won’t stop Iran’s nuclear program, it will cause assorted problems, not least by making the whole empty spectacle of negotiations appear worthless.

 

  • Texas Patriot

    As Benjamin Netanyahu says, when your enemies want to destroy each other, let them do it. American energy companies can get a lot leaner and a lot meaner and a lot more competitive. The shale oil revolution is just getting started. we are now getting better and better, both from a production standpoint and an efficiency standpoint, so that we are producing more and more oil at a lower and lower cost. Saudi Arabia is shooting itself in the foot. From what I have heard, with their debt structure and the enormous demands of their social welfare programs, their breakeven point for oil sales is $85 per barrels. Efficient American producers can produce oil and make money at half that price. Things are far different today than they were in 1973 when OPEC threatened to use oil as a “political weapon”. There are now many other sources of supply in the world, and our technology is vastly superior to what it was back then. If the Saudis want to have a price war today,, fine. This time around, that’s a war we can win.

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  • Pete

    The lower oil prices are hurting the American oil industry. Not much we can do except innovate, get more efficient, tighten our belts for a while (oil & gas industries) and cap some wells for a time.

    We have to outlast them out. The economic warfare is directed at Russia-Iran axis and their allies/proxies. It is also directed at us.

    I hope the tight budgets cause unrest at home in Iran.Maybe we get another Green Revolution during the 1st year of the new president, Hopefully this president will do more than Obama did, which was to sit on his hands.

    • Schlump

      “hurting the American oil industry”

      They made plenty when the cost was less than $2. With the $.99 that refineries tacked on in 2009, it’s been windfall profits across the board.

      The only thinsg keeping gas prices high right now are collusion between the 3 U.S. companies that sell at the pump and the two internationals that sell at the pump, plus the selling of refined gasoline to other countries.

      • Pete

        “They made plenty when the cost was less than $2. ”

        What did they pay employees back then compared to now.
        What is the difference in taxes between then & now.
        What is the difference in cost between then and now.

        Are you telling me their income costs have not gone up?

        Do not tell me what the absolute cost of something is. tell me what the cost of some thing relative to other things over time.

        • MarilynA

          I believe he meant when the cost of gasoline was less than $2 per gallon. I don’t remember in my lifetime when oil was less than $12 per barrel. At that time gas was selling for 29 cents and 32 cents per gal. and curing gas wars you could get it 3 gal. for $1.

  • Gee

    The US should announce any country that does business with Iran cannot do business with America. Then you will see Iran fall

    • Pete

      We were close to that position. Iran was under a tight squeeze. Then that ____ Obama started easing sanctions 12 to 18 months ago.

      • Gee

        No the US was never remotely close to that level.

    • MarilynA

      Start with GE. GE has been doing business with Iran all along and Bill Clinton looked the other way. don’t know what George Bush did about it but since I didn’t’ hear he stopped it, I assume he allowed it to continue.

  • Matthew Johnston

    The USA is also taking losses with sand oil, needs to be around 90 US a barrel to be viable. So Saudi Arabia are running at a loss. But by far Iran are suffering the most. The US does not export has only limited off shore drilling and not tapped the Pacific strategic triangle Johnston, Rose Atoll etc. So this insulates Saudi Arabia and OPEC losses. So there is enough production at the moment to meet demand. If the US lifted production off shore and exported oil would be around 27 US a barrel. Kill the sand oil business and it not going to make a new rig any cheaper than a billion dollars. Dump the Iran stuff on the market 10 to 12 dollars a barrel US. ;-)