One of last month's most interesting developments in Persian Gulf power politics played out not in the Middle East, but in Vienna, Paris, and Washington. For these Western cities were the venues for an important series of exchanges that revealed much about the changing balance of power among the Middle East's major oil producers, including the Islamic Republic of Iran and the Kingdom of Saudi Arabia. In particular, these exchanges underscored how Saudi Arabia's current regional strategy -- which we have previously described as"counter-revolutionary" -- is weakening the Kingdom's position.
Saudi Arabia came to last month's OPEC ministerial meeting in Vienna determined to get the oil producers' group to raise production quotas for member states, in order to lower oil prices around the world. The Saudis have long had a more conservative view of the price elasticity of demand for crude oil than their OPEC brethren. Under current circumstances, however, the Kingdom had a number of other reasons for wanting to engineer a reduction in oil prices -- something that the United States and other Western countries were eager to see.
Among other considerations, lowering oil prices is seen in Riyadh as a way of increasing economic pressure on the Islamic Republic. In this regard, it is useful to review the speech given last month by Prince Turki al-Faisal (Saudi Arabia's former intelligence chief and Ambassador to the United States, whom we know and regard as a highly capable diplomat, strategist, and defender of the Kingdom's interests and regional position) to a closed-door gathering of U.S. and British military officers at a NATO air base in the United Kingdom. According to the Wall Street Journal, which obtained a copy of Turki's remarks, the Prince told his audience that "Iran is very vulnerable in the oil sector, and it is there that more could be done to squeeze the current government." More pointedly, Turki said that "Saudi Arabia has so much [spare] production capacity -- nearly 4 million barrels per day -- that we could almost instantly replace all of Iran's oil production."
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