Saudi-Iranian Crisis, China’s Economic Slide Set Stage for Perfect Storm in the Oil Market

Date: 01-05-2016 | Category: Energy Security, Geopolitics, In the News, Middle East, Russia and Eurasia

The Atlantic Council January 5, 2016 By Ariel Cohen The deepening rift between Saudi Arabia and Iran may have dire consequences for global oil markets because the kingdom’s Eastern Province, where the Shia are in the majority, produces most of its oil. Production would suffer if Iran were to foment unrest among this population. This crisis between the Middle East’s two major oil producers coupled with the slowdown of the Chinese economy make up the ingredients of a perfect storm for oil in 2016. The execution of a Shi’ite cleric, Sheikh Nimr Baqr al-Nimr, in Saudi Arabia prompted an angry response in Iran where mobs ransacked and burned the Saudi Embassy. Saudi Arabia, Bahrain, and Sudan responded by breaking off diplomatic relations with Iran; the United Arab Emirates and Kuwait recalled their Ambassadors to Tehran.

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