It’s no secret that Saudi Arabia and Iran are bitter rivals. The Sunni Saudis are deeply suspicious of Iran’s influence in Arab countries such as Bahrain and Iraq and want to weaken the Shiite republic, especially when it comes to both nations’ most important export: oil. “Iran is very vulnerable in the oil sector, and it is there that more could be done to squeeze the current government to join the world efforts toward peace,” said Prince Turki Al-Faisal, the ex-Saudi intelligence chief, in a speech at a Royal Air Force base on June 8.
Now the Saudis are showing how serious they are about hitting Iran where it hurts. Iran has long supplied four refiners in India, yet thanks to U.S. sanctions, the Indians have encountered ever-tougher obstacles to paying for their Iranian crude. Indian refiners used to settle payments with Iran through a regional organization called the Asian Clearing Union. Late last year the Indian central bank scuttled that arrangement out of fear Indian banks would be barred from doing business in the U.S.
By this summer the Indians owed Iran $5 billion and the Iranians said enough was enough, according to three executives at Indian refiners, who asked not to be named because, they say, the Indian government has told the companies not to talk. In mid-July, when the Indians still hadn’t received details about the dates or amounts of their August shipments from Iran, they contacted Saudi Aramco, the Kingdom’s national oil company, which also supplies India. The Saudis were glad to help. Saudi Aramco is expected to send around 3 million additional barrels to India in August, on top of the usual 12 million. The Saudis are trying for even more Indian business, according to the refinery executives. “Because of sanctions Iran seems unable to provide the reliability a refiner wants,” says Bhushan Bahree, an analyst at IHS CERA, the energy consultants. “The Saudis are benefiting from that.”
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