This preview shows page 1. Sign up to view the full content.
Unformatted text preview: ar that it aims to draw the line against Iranian expansionism. 27 Iran is
dependent on oil revenues for more than 65 percent of its government revenue. In contrast, the Kingdom is in a position to withstand a
period of low oil prices. Thus, Saudi Arabia’s ability to wage a price war is a major tool it can use to diminish Iranian power in the
region and weaken Iran’s position as a regional military and political rival to the Kingdom. The ability to wage an oil price war also
helps the Kingdom to guard against other producers with large oil reserves, such as Iraq, from taking over its oil market share. In fact,
Iraq has expressed the ambition to reach 10 to 12 million b/d of production by 2017. This level is commensurate with Saudi Arabia’s
capacity. Rising Iraqi output could alter the balance of political power within OPEC and challenge Saudi Arabia’s current leadership.
Iraqi oil reserves are considered very low-cost to develop and are competitive with those of Saudi Arabia. In summary, while the costs
of maintaining enough spare capacity to wage a price war have risen for Saudi Arabia, there are still many geopolitical incentives for
the Kingdom to maintain this capability. This includes contributing to its security by weakening Iran and by remaining important to
the United States, which would then be more apt to provide security guarantees in exchange for the free flow of oil.28 193
Last printed 9/4/2009 7:00:00 PM Oil DDW 2012 1 ***Low Prices Good – General*** 194 Oil DDW 2012 1 Low Prices Good – Stability 195
Last printed 9/4/2009 7:00:00 PM Oil DDW 2012 1 High oil prices cause state aggression and weakness that undermines security
Umbach, Centre for European Security Strategies (CESS), Munich-Berlin, Germany, 09
Frank Umbach, Centre for European Security Strategies (CESS), Munich-Berlin, Germany, 3-6-09, [“Global energy security and the
http://www.sciencedirect.com/science/article/pii/S0301421509000421] E. Liu
These energy prices offer a significant increase of hard currency in the state budgets for many producer states. The New
York Times columnist Thomas L. Friedman and others have identified a direct correlation and negative impact of average
crude oil prices on political freedom, democratisation and the direction of cooperative or confrontational foreign policies.
According to his ‘‘First Law of Petropolitics’’, the higher the average oil and gas prices on the international market, the
lower the internal political and economic reform willingness of governments and the more confrontational their foreign and
security policies, leading to ‘‘petro-authoritarianism’’ (Friedman, 2006). It explains the present policies of those ‘‘petroist’’-states such as Russia, Iran, Venezuela, Nigeria, Sudan and others, which are highly dependent on oil and gas for their
GDP and having either weak institutions or authoritarian systems. They have started asserting themselves domestically as
well as in their foreign polic...
View Full Document
- Spring '13
- The American