Sloshing oil, slapping bouts, our interests
The crude oil price has hit the rock bottom of US$ 35 per barrel from US$ 115 only six months ago. This is the lowest in 11 years. The world is sloshing with oil; importing countries have never had it so good! They are enjoying for the first time a price boom in the reverse through huge savings on crude oil bills. The so-called liquid gold may have lost some of its lustre but not its influence as an instrument of geopolitics.
One may ask whether the advantage of the oil importing countries has been the disadvantage for the exporting countries as conventional economics would have us believe. Hardly so because the oil surplus countries are sitting on comfortable reserves of earnings by self-dictated high prices piled over the years. The case in point is Saudi Arabia. For, despite its huge budgetary deficits, thanks to its prodigality of expenditure, is not in the slightest spot of a bother. They retain a freedom of action to play around with.
Just how they are doing it makes an interesting read. The oil-rich countries being at war with themselves are literally loving the bust, if you will. They are utilising it as a weapon in the proxy wars in the Middle East along sectarian lines.
Saudi Arabia has deliberately opted for stepped up oil production taking the lids off all the oil fields. Its only object is to dampen the crude productivity in Iran. This is done at a time when Tehran has gorged out 8.5 tonnes of enriched uranium in compliance with the nuclear deal hoping that the sanctions on Iran's oil sales will be lifted. But its prospect for high revenue earnings from reopened oil fields is pushed into jeopardy.
That way, Saudi Arabia has killed two birds with one stone, it has avenged pro-Assad role by Moscow and Tehran.
The traditional rivalry between Saudi Arabia and Iran for a sway across the region is coming into fuller play. Iran's war in Yemen in support of Shi'ite Housti rebels is being countered by Saudi Arabia; Prince Mohammad, the son of Saudi King Salman, is in charge of the proxy war in Yemen. Houstis, the once-obscure Shi'ite Muslim minority rebel group has taken charge of Yemen. How a sectarian conflict is being fueled; nothing short of stoking fire of a wider conflagration.
In parallel, Saudi execution of Shi'ite leader Nimr al-Nimr along with several of his associates, the attack on Saudi embassy in Tehran, and breakup of diplomatic relations between Tehran and Riyadh have triggered chain reactions in the region. Almost all the Gulf Cooperation Council countries have broken off diplomatic ties with Iran.
All this presages a strategic shift that has 'dire implications for the Middle East and Western foreign policies' – that is the reading of most world watchers today.
In this context, we need to be careful so that we are not caught in the welter of sectarian conflict of any shape or form.
Our being a 'perceived' part of the 34 Muslim country coalition against ISIS presumably prompted the foreign minister's visit to Riyadh. The ISIS is faceless except for its self-proclaimed trophies of cruelties from time to time. What will be strategy and modus operandi to fight it; whether any foot soldier is capable of being put on the ground since their territorial presence is fast shrinking, may be worth pondering.
An ideological threat cannot be fought on a sectarian basis, it has to be countered by an ideology which is inherently available to us.
Before utilising it, we must first triumph over disenfranchisement because it is from it that the extremist fringe picks up its recruits.
While maxi-oil wars are playing out in the Middle East and North Africa we have our mini version of an oil battle to be won at home. At long last, the government has given us to understand that oil prices will be revised downward to reflect some of the steep fall in crude oil prices. The finance minister has indicated a change of heart in view of the BPCs losses having been recovered in full measure. It has been long time coming over which BPC has been subsidised instead of the consumers. Though coming too late, it mustn't be too little. For you consider the prospect of a multiplier effect on investments coming from a rational adjustment of fuel price!
And, we shouldn't also be 'sitting on cash' because it risks erosion of buying power if kept idle for long.
The writer is Associate Editor, The Daily Star.