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George Liu
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I am the Chief Financial/Economics Columnist of The Daily Political Review, a Monitored Contributor for FOREXPROS, a Seeking Alpha Certified Contributor, as well as a paid blogger for The Motley Fool Blog Network. I also currently serve on the Board of Directors for Ureka Co. Currently, I am... More
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  • Why Saudi Arabia Is On Our Side 0 comments
    Jun 14, 2012 5:20 PM

    Well, in terms of oil prices anyways. As FT Alphaville reports, Saudi Arabia "wants to bathe the world in affordable oil." On Thursday's OPEC meeting, Saudi Arabia and its Gulf state allies want the quota on oil raised, increasing the supply of relatively abundant oil coming from OPEC countries.

    So why is Saudi Arabia sticking out its neck for more abundant oil? Simple. This is a textbook example of an oil state leveraging its oil-producing capabilities for, among others, political advantages on the international arena. As noted by oil watcher and economist Phil Verleger:

    • Lower oil prices will help convince Russia to cooperate with Saudi Arabia and the west on Syria
    • Lower oil prices will put increasing strain on Iran
    • Lower oil prices will help Saudi Arabia renew its membership in the G20

    Of course, there are also various economic benefits, but this development goes to show that oil is just as much a political weapon as it is an economic weapon.

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