Riyadh-Tehran conflict to aggravate, but not to affect oil prices – expert

Riyadh-Tehran conflict to aggravate, but not to affect oil prices – expert
20:12 6 Yanvar 2016
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Baku, Azerbaijan, Jan. 6
By Anakhanum Khidayatova – Trend:

The conflict between Saudi Arabia and Iran can last long and will only aggravate, Yevgeny Satanovsky, the president of the Russian Independent Scientific Center "Institute of the Middle East", said.

"This clash is much more serious than the Israeli-Palestinian conflict," Satanovsky told Trend Jan. 6. “A third side will fail to mediate the normalization of relations between the parties.”

Satanovsky also said that Saudi Arabia-Iran conflict has objective reasons and has lasted more than 1,300 years.

"These are two successful countries with huge ambitions and huge complaints about each other," he said.

Satanovsky does not share the opinion of many experts that the conflict will somehow affect the growth of hydrocarbon prices.

"The conflict will not affect the situation around oil prices,” he said. “Oil prices have not been dependent on the military conflicts since 1970. They are dependent on the volume of oil production and the volume of the market. If the oil consumption drops in China, no one needs it [the oil] and the prices fall."

He said that if the Iranian and Saudi Arabian oil is not supplied to the market any more, it means that Venezuelan oil, Russian oil or oil of any other producer will be offered to the consumers.

"The balance of hydrocarbon resources has greatly changed since 1970s,” he said. “For example, the US has already filled all its oil storage facilities and started to export oil for the first time in 40 years. The market has changed a lot. Its correlation with certain events is usually discussed by amateurs, who say that the prices will rise or fall."

Satanovsky also refrained from any predictions for oil prices.

Iran produces 2.8 million barrels of oil per day and exports 1.1 million barrels of this volume per day.

Saudi Arabia produces more than 10 million barrels of oil daily and exports more than seven million barrels per day.

Relations between Saudi Arabia and Iran soured after execution of Nimr al-Nimr, a prominent Shia cleric, by the Kingdom along with other 46 people, which was followed by a strong protest from Iran.

Mass protests took place in Iran following the execution. In particular, the Saudi embassy in the capital Tehran and the consulate in the city of Mashhad were attacked, after which Riyadh broke off diplomatic ties with Tehran on Jan. 3.

Saudi Arabia’s permanent representative to the United Nations Abdullah al-Moallem said that relations with Iran will be restored only when Tehran stops “interfering in the internal affairs of other countries, including that of Saudi Arabia’s”.
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