by Pepe Escobar
6 Jan, 2016
RT.com

Saudi Arabia is a beheading paradise. But this PR nightmare is the least of all problems in an oil crisis. Once again, the heart of the matter is – what else – black gold.

So far, the House of Saud’s whole energy strategy has boiled down to shaving off its oil production no matter what it takes, even issuing bonds to cover its massive deficits.

Now the strategy has been moved one step ahead via a flagrant provocation: the execution of Shiite cleric Nimr al-Nimr.

The House of Saud believes that by stoking the flames of a Riyadh-Tehran confrontation it may raise the fear factor in the oil supply sphere, leading to higher oil prices (which it needs), while maintaining the Holy Wahhabi Grail of keeping imminent Iranian oil off the market.

From the beginning, Riyadh bet on the possibility of extra energy-related sanctions on Iran in case Tehran forcefully responded to its beheading provocation. Yet Iranians are too sophisticated to fall for such a crude tap.

Persian Gulf traders have confirmed the 2016 Saudi budget is based on an average crude oil price of only $29 per barrel, as first reported by Jadwa Investment in Riyadh.

From the House of Saud’s budget dilemma perspective, this is absolutely unsustainable. The House of Saud is the biggest OPEC oil exporter. Yet their supreme hubris is to deny Iran any leeway in exports, which will be inevitable especially in the second half of 2016. Moreover, the low oil price strategy doesn’t apply solely to Iran: it’s still part of the oil war against Russia.

Somebody though is not doing the math right in Riyadh. The Saudi low oil price strategy has been punishing Russia – the number two global oil producer – badly. The Saudis cannot possibly expect that their beheading provocation will simultaneously scotch an OPEC-Russia deal on cutting production and also lead to higher oil prices, which would mostly benefit – guess what – Iran and Russia.

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