The Saudi/Iran Crisis: 10 Things You Need To Know

The Saudi/Iran Crisis: 10 Things You Need To Know
The Saudi/Iran Crisis: 10 Things You Need To Know

Here are 10 things you  need to know about the ongoing conflict between Saudi Arabia and Iran that is upsetting oil markets:

It is a longstanding conflict between different sects of the religion of Islam that has been raging for centuries. It is true that the recent Iranian provocations dating back to April have emanated out of the Saudi intervention in the civil war in Yemen, but tensions between these two Middle East powers have always existed and no easy solution exists.

The U.S. has allied itself with Saudi Arabia for strategic reasons in the region, not because the House of Saud is made up of wonderful people. All Americans should keep in mind that this is still a very brutal regime that discriminates against women and gays in heinous ways and levies punishments for crimes that civilized nations consider to be atrocious.

Oil prices will probably rise more than they already have, and that will be reflected in gasoline prices at the pump. Crude prices rose 15% on Monday in response to the Iranian missile strikes on Saudi facilities, but since then have cut that increase in half. However, we should expect them to slowly move farther up in coming weeks as it becomes evident that Saudi promises to quickly restore all lost production are, to be kind, overly-optimistic. Photos show extensive damages to the gigantic Abqaiq oil processing center, and they will take months, not weeks, to resolve.

Ongoing harsh rhetoric between the two countries and from the Trump Administration are also likely to make markets nervous, and market nervousness almost always results in rising prices. Iran said on Thursday that it is preparing for “all-out war,” a promise that, while common from that brutish regime, never has a calming effect.

Don’t expect a military response to come directly from the U.S. While the Trump Administration might approve a strike by Saudi Arabia that is proportional to the Iran attacks, it remains unlikely that President Trump will be willing to directly engage U.S. armed forces in such a conflict. The President was elected in part on his promise to keep the U.S. out of further military engagements in the Middle East and Africa, and to work to end some or all of the myriad such conflicts he inherited from the predecessors in office. He has remained focus on keeping that promise, often to his political harm.

This crisis shows how crucial it is to keep on fracking. With various Democratic presidential candidates promising to outlaw hydraulic fracturing, or “fracking”, should they win next year’s election, it is important for Americans to understand what doing that would mean.

      • The U.S. Energy Information Administration (EIA) notes that this is the largest sudden interruption of crude oil supply in global history, larger even than the Arab Oil Embargoes of the 1970s. Had this interruption of supply happened just a decade ago, when the U.S. was a net importer of 60% of its daily oil needs, you would already be waiting in long lines at gasoline stations and experiencing shortages of supply.
      • Today, the U.S. is a net importer of less than 10% of is daily oil needs, thanks to the massive new volumes of oil produced from shale plays around the country. This oil could never have been produced without the use of fracking. 
      • Thus, while gas prices have already gone up slightly, and will likely rise further in the coming weeks, gasoline supplies will remain plentiful in this country because of our country’s much higher degree of energy security.
      • That energy security would disappear quickly if candidates like Elizabeth Warren, Bernie Sanders, Beto O’Rourke and Kamala Harris succeed in their promise to outlaw fracking.

Shale Magazine will continue to provide updates on this critical international situation as events warrant.

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