Drama in the Gulf


“Saudi Arabia and Iran are already engaged in proxy wars in Yemen and Syria,” Carsten Fritsch of Commerzbank gravely notes, before throwing up this zinger: “Any direct military dispute between the two hegemonic powers in the Middle East would have grave consequences for global oil supply.” What?

Neither Iran nor Saudi Arabia is a hegemonic power. There is only one hegemonic power in the Middle East: The United States. Saudi Arabia and Iran are regional powers that can push around weak states and intervene in destabilized countries. Neither of them is in any position to impose hegemony. To be sure, Iran could potentially emerge as a regional hegemon if the United States ever withdrew permanently from the Persian Gulf region. But that is not going to happen any time soon: Control over access to the gulf’s immense energy resources gives the US veto over potential challengers (you know who) that rely on imported energy.

The Saudis can be charitably described as primus inter pares among the oil monarchies on the Arabian peninsula. For instance, when the Al Khalifa, the Sunni rulers of Bahrain, felt threatened by unrest among their Shia subjects, they called on the Al Saud. The Saudis promptly sent troops across the King Fahd highway to restore order. Similarly, when the Houthis came down from the hills to kick out the new regime installed by the Saudis, Riyadh invaded with a view to restoring their man at the helm. The Al Saud also became the principal backers of the military junta in Egypt after the ouster of the Muslim Brotherhood government. And, of course, they are bankrolling and arming dozens of Islamist rebel groups against Assad.

The Iranians have their own clients in Baghdad, Damascus, and Beirut. These statelets look to Tehran for help. Iranian forces helped fend off ISIS from Baghdad. And Iran deployed its Quds force to Syria, which, together with Hezbollah fighters, helped Assad fend off the rebels’ advance. Assad’s reliance on Tehran has reduced since the Russian intervention but not markedly so because he continues to lack sufficient manpower to hold on to the territory he still has.

The Iranians and the Saudis have been fighting a proxy war across the ‘arc of weakness.’ The recent breakdown in diplomatic relations began with the execution of a prominent Shia critic in Saudi Arabia. The Saudis had thrown in a couple of Shia faces among the Salafist-Jihadists to be beheaded in order to appear evenhanded. The execution of the cleric prompted a ransacking of the Saudi embassy in Tehran. In response, the Saudis promptly severed diplomatic ties with Iran. Saudi lackeys — UAE, Bahrain, and Sudan — quickly followed suit.

The rapid deterioration in cross gulf relations seems to have rattled oil traders. Some are fretting over the possibility of an open militarized dispute between the champions of competing sectarianisms.

Guys, the probability of a war between the two states is practically zero. The reason is straightforward: The Saudis are relatively too weak to contemplate attacking Iran and the Iranians can be certain that the US would intervene to protect the Al Saud. And if either miscalculates and the two end up coming to blows, Uncle Sam would put an end to it in short order.

There is no trade here yet. If the price of crude jumps up significantly, then there will be a profitable trade: One would short crude on the accurate expectation that any instability premium would get priced out in a matter of days.

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