Current events could lead to another oil embargo by Saudi Arabia, and it could be 1973 all over again.
In early August, the Canadian foreign minister tweeted in support of two human rights activists imprisoned in Saudi Arabia. Within days the Saudis recalled their ambassador, expelled the Canadian ambassador and banned trade between the two countries. Reuters noted that "the outsized reaction to the tweet underscores how the kingdom is taking a much harsher stance against what it perceives as Western interference in its internal affairs."
Now there is significant new interest in Saudi internal affairs, and the President of the USA says "we’re going to get to the bottom of it and there will be severe punishment." The Saudis, meanwhile, are promising another outsized reaction. Headlines this morning include Don’t rule out $400 oil if the U.S. sanctions Saudi Arabia. A senior Saudi editor wrote:
It would lead to Saudi Arabia's failure to commit to producing 7.5 million barrels. If the price of oil reaching $80 angered President Trump, no one should rule out the price jumping to $100, or $200, or even double that figure.
Steadfast & Glorious
