Oil as a political conflict instrument - ERDAL TANAS KARAGÖL

Oil as a political conflict instrument

The history of tension between Iran and Saudi Arabia goes back to the past.

Even if they are both Muslim countries, the relationship between these two countries as the example for “enemy brothers” has been carried to a dangerous dimension again after Saudi Arabia announced the execution of Shiite cleric Nimr Baqir al-Nimr.

If we look at statements made by both Iran and Saudi Arabia, it seems mutual sanctions will be expanded under this tension.

At the top of these sanction instruments comes oil. Under this intense atmosphere it is highly probable that Saudi Arabia will play the energy trump card, meanwhile Iran will use its sectarian power.

But the results of dragging the incident into a sectarian conflict and two countries playing their trump cards are quite different.

Using the energy cards in this conflict can be understood, as it already seems that the instrument that will determine the continuation of the relationship among the countries will be energy for a long time. We know that the desire to have a say in energy resources in the Middle East is already the main reason the region is a center of chaos and conflict.

WHAT WILL HAPPEN TO OIL PRICES?

Iran and Saudi Arabia, which were members of the Organization of the Petroleum Exporting Countries (OPEC), have already been on opposite sides in the decision to supply oil against falling oil prices.

Because of the oil resources of Saudi Arabia and the lower cost of its oil drilling relative to other countries, it has an important function in OPEC.

Although all OPEC countries are negatively affected by the decline of oil prices, this power is why Saudi Arabia cannot be influenced to restrict oil supply.

Yet since the beginning Iran has been claiming that a decrease in prices could be prevented with restriction of oil production.

The new crisis between these two countries means continuation of the disagreement among OPEC countries and therefore it means a further decline in oil prices.

Time will show how the oil wars between these two countries reflect on political relations.

When OPEC is not applying quotas on oil supply, considering the US's announcement that it will continue shale oil production and Iran's announcement that it will increase its oil production capacity if sanctions on Iran are lifted, it is obvious that tough times await oil-producing countries with regards to oil prices in 2016.

WILL THE IRAN-SAUDI CRISIS AFFECT TURKEY?


Meanwhile, it is a fact that oil-exporting countries are increasing their production and therefore the fall of oil prices is something positive for oil-importing countries.

The fall of the crude oil price under $35 will significantly decrease costs of countries that import oil. Turkey is also among these countries.

In addition, competition among countries having oil and natural gas resources can accelerate the fall of the country energy prices. Saudi Arabia can decrease the price of natural gas that it will export to Turkey, in order to weaken Iran's market power in Turkey. On the other hand Iran can try the same method, not shrink its market share in Turkey.

From now on, we can say that Turkey will be positively affected by energy moves between these two countries. That's why, in this process in its relations with Saudi Arabia and Iran, Turkey should continue both to strengthen its position as a hub besides being a transit country in the “energy equation” that will be established in the region and provide its energy supply security.

Finally, the fact that the two countries need Turkey, both in regional politics and energy, guarantees that Turkey is indispensable to them.





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