All-out Iran-Saudi Arabia war may lead to $300 per oil barrel

All-out Iran-Saudi Arabia war may lead to $300 per oil barrel
13:22 11 Yanvar 2016
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Baku, Azerbaijan, Jan. 11

By Elena Kosolapova – Trend:

If all-out war burst out between the Saudi Arabia and Iran, oil prices could go to the $300 plus range fairly quickly, professor of economics in the US National Defense University, Adjunct Professor in Georgetown University Paul J. Sullivan told Trend.

He did not specify how long the prices would remain at this range.

Sullivan, also an expert in energy and Middle East, noted that massive amounts of oil reserves can be found in the areas on both sides of the Gulf where most of the population is Shia (both in Iran and Saudi Arabia). The proved oil reserves of the Gulf exceed 730 billion barrels, according to various estimates.

“If Iran's proxies and followers go kinetic in Eastern Saudi Arabia [inhabited by Shia] and start blowing up energy facilities and pipelines then oil prices will be effected,” Sullivan said.

Meanwhile he noted that he does not see this as a high probability set of events, but also he does not rule it out.

Moreover if the Saudi-Iranian conflict makes the proxy wars more violent and the region more unstable it could also have a deep effect on oil prices, Sullivan said.

The expert noted that the tensions have been effecting OPEC for some time and Iran and Saudi Arabia have been at odds for a very long time.

“These tensions could get much worse and could lead to open conflict, but I hope not,” he said.

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.

Some Iranian protesters stormed Saudi embassy in Tehran on Jan. 3, smashing furniture and setting the building on fire before being dispersed by police. The Saudi consulate in the eastern city of Mashhad also was attacked. Saudi Arabia broke off diplomatic ties with Iran in response to these attacks.

Over the past 30 years, the maximum oil price reached almost $144 per barrel of Brent in 2008. In January 2016 the oil price averages at $32-35 per barrel.

Edited by SI

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