Gold wasn’t the only battered commodity enjoying a good Monday. Crude oil prices rallied by three per cent. It wasn’t demand driven. What was it?
It could have had something to do with a series of events in Tehran and Riyadh over the week. Those events make it hard to pretend that Saudi Arabia and Iran are not at war with each other. Right now, proxies are fighting that war in Iraq, Syria, and all over the Middle East. Is it possible the two main rivals will fight each other? Hold that thought.
The trouble began on Saturday when Saudi authorities announced they’d executed 47 people. One of them was a Shiite cleric. The Saudi regime (in simplistic terms, the Sunni faction in Islam’s civil war) accused the cleric of “sedition, disobedience, and bearing arms”.
He was beheaded
Protestors in Tehran reacted by storming, and briefly setting fire to, the Saudi embassy. Tehran’s spokesman promised “divine vengeance” on the Saudis. Saudi Arabia responded by breaking off diplomatic relations with Iran on Sunday night. That’s about where we stand now. And if there was a diplomatic version of a “trading halt”, now would be a good time for it.
All of this happens in the context of a global oil price war. Both regimes, in Tehran and Riyadh, rely on oil to support them. Both want to win market share at the expense of the Russians and the Americans. And both are desperate to use volatile political and religious rhetoric to rally their populace in support.
It’s dangerous playing with dynamite. About the only thing worth adding today is a fact: most revolutions end in the same way. A man is lined up against a wall and shot. Or a King is paraded out in the public square and relieved of his head. Will the revolution be in Tehran or Riyadh? Thoughts welcome to firstname.lastname@example.org.