Iranian hard-liners are lashing out at Saudi Arabia, accusing it of conspiring with the West to keep oil prices low in a bid to harm the Islamic Republic’s economy and pressure the country to conclude a nuclear deal with West. In retaliation, Iranian hawks are urging restive Shia Muslims in eastern Saudi Arabia to rebel against the ruling House of Saud.
Iranian hawks’ accusations have mounted over the Saudi’s refusal to cut production – in an effort to maintain its share of the global oil market – fueling the precipitous slide in prices. Crude oil prices have fallen by more than half since June, from $115 a barrel to below $50.
"We will not forget which countries schemed to lower the price of oil," the speaker of Iran’s parliament, Ali Larijani warned darkly during a visit last month to Damascus, the Syrian capital.
U.S. officials deny any collusion between Washington and Riyadh.
"The Saudis learned their lesson from the past when they curbed production to help keep oil prices high, only to see Russia and Venezuela grab some of their market share," said a senior U.S. State Department official, who declined to be named.
The real targets of Saudi Arabia’s decision not to cut production and to contribute to the falling price of oil are America’s shale oil producers, the official argued.
American oil production
Thanks to shale oil, America has become the world’s largest oil producer, an emergence that has reshaped the world’s energy market.
Though America does not export crude oil, it imports much less now, increasing reserves around the world. Global demand for oil has fallen with the downturn in global economic activity and with increased efficiency. And consumers’ switch from oil to other fuels and energy sources, including renewable energy, is helping reshape oil markets, experts say.
American shale oil producers have been hard hit by the slumping price of crude.
Prices started to tumble when the Saudi-dominated Organization of Petroleum Exporting Countries (OPEC), which controls about 40 percent of the world market, failed to decide on production curbs during a November meeting in Vienna.
Charges of price manipulation
Like Iran, whose government depends heavily on oil revenues, other economically hard-pressed exporters such as Russia, Nigeria and Venezuela have accused Saudi Arabia of manipulating oil prices for political purposes.
Kremlin aides have decried low oil prices as part of an anti-Russian plot hatched by the United States and Saudi Arabia to push their country toward collapse.
But the loudest conspiracy accusations come from Tehran.
The weekly newsletter affiliated with Iran’s Islamic Revolutionary Guards Corps (IRGC), the elite military group that protects Iran’s theocratic Shia Muslim regime, last month threatened revenge on the Sunni-ruled Gulf kingdom “with all the means Iran has at its disposal,” Memri TV recently reported. It’s part of the Middle East Media Research Institute, a U.S.-based nonprofit that monitors Mideast media.
Memri also reported that Amir Mousavi, a former IRGC diplomat and director of Iran’s Center for Strategic and International Studies, recently warned, "Saudi Arabia’s move is a suicidal step in the struggle against Iran in the region."
"So far, Tehran has held back and has acted in moderation," Mousavi continued. "... Saudi Arabia is certain that Iran will not respond easily, but it seems that this time the situation is different, and if necessary Saudi Arabia’s economic interests in the region and in the world will be harmed."
Some anti-Saudi Iranians already appear to be retaliating, urging disaffected Shiites in eastern Saudi Arabia to rebel. An IRGC-affiliated Twitter account on December 20 posted, "People must defend themselves against the repeated military attacks by the Al-Saud regime."
Iranian threats toward U.S. ally Saudi Arabia are nothing new. But with the region roiled by vicious sectarian struggles, the war of words risks pouring fuel – cut rate or not – on Shia-Sunni fires.
Tehran’s tougher language is at odds with U.S. President Barack Obama’s conciliatory comments about Iran. Last week, in an interview with National Public Radio, he said Iran has an opportunity via talks about a nuclear deal "to get right with the world." He held out the possibility of opening a U.S. embassy in Tehran and offered the prospect of Iran being accepted as a "successful regional power."
Nuclear talks resuming
Nuclear talks are set to resume next week in Geneva between Iran and the P5 + 1 – the United States, China, France, Russia and the United Kingdom, plus Germany. Western governments have long feared Iran has been developing a nuclear program to build weapons; Tehran insists the country needs nuclear power for energy purposes.
In November 2013, Iran made a one-year deal with world powers to freeze its nuclear program in exchange for easing international sanctions against the country. The deal since has been extended until July.
At a conference Sunday in Tehran, Iranian President Hassan Rouhani said the country needs to end its political isolation so its economy can grow. The moderate-inclined Iranian president has been criticized by Iranian hard-liners for his determination to seal a nuclear deal. Iranian hawks are wary of any compromising with the West.