WASHINGTON (Sputnik) — The latest moves by Saudi Arabia to slash oil prices are an attempt to cripple Iran and prevent it from re-emerging as a major oil exporting rival, former European Union and US Agency for International Development consultant Paolo von Schirach told Sputnik.
"The Saudis are clearly trying to drive down global oil prices to rock bottom levels through over production in order to hurt Iran. It should be seen as part of a coordinated anti-Shia strategy," Schirach, publisher and editor of The Schirach Report, said.
Saudi policy was being driven by passion to grab as large a market share as possible, even at the risk of dangerously depressing global oil prices, he warned.
"Saudi strategy can be best described as keep oil prices low, steal Iranian customers. The Saudis are openly trying to steal business from Iran," Schirach explained.
Riyadh wanted to lure Spain, Italy and other major European nations into major oil deals before Iran had the chance to so, he maintained.
However, this aggressive marketing strategy threatened to backfire disastrously on the Saudis, Schirach predicted.
"Can this strategy work? I have my doubts. The Saudis may end up isolating themselves. By forcing the entire OPEC cartel to tighten its belt (member countries produce about 30 percent of the entire world oil supply) Saudi Arabia is not winning any new friends," he added.
In 2015, the Saudis ran a huge budget deficit of $98 billion, Schirach pointed out.
"In order to finance it, the Saudi rulers had to dip into their vast cash reserves, while issuing bonds at the same time. This game cannot go on forever," he cautioned.
The Saudi Royal family continues to need enormous oil revenues to keep its government in power but if oil exports fall in volume in the long term, the government in Saudi Arabia will not remain in power long, Schirach noted.