Saudi-Iran Fracas Ratchets Up Regional Tension, Oil Output Likely To Rise

Simmering Saudi-Iranian tensions erupted following Saudi Arabia’s 1 January execution of a prominent Shia cleric, drawing in states from across the region. Although this has prompted speculation that exacerbated Sunni-Shia tensions could threaten oil production and exports in the Gulf, this would require a much greater escalation. Indeed, the development looks set to pave the way for increased crude production in the Gulf in 2016. Certainly it further reduces the already-slim prospects of Saudi Arabia and its allies agreeing to reduce output to make way for fresh Iranian volumes once sanctions are lifted.

In total Saudi Arabia executed 47 people on 2 January. While the majority were Sunni, including extremist Al-Qa’ida and Islamic State (IS) supporters, it was the death of Shia cleric Shaikh Nimr al-Nimr that prompted violent unrest both within the kingdom’s Shia population and across the region.


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