Al Jazeera

Al Jazeera 22 Jan 2020

Iran seeks to resolve tensions with Saudi Arabia


Iran is looking to work with Saudi Arabia to resolve tension between the countries.
President Hassan Rouhani's Chief of Staff Mahmoud Vaezi told Iranian state media Tehran and Riyadh could work together to resolve their problems.
But the relationship should not become like the one Iran has with the United States, he said.
Diplomatic relations were severed after an attack on the Saudi embassy in Tehran in 2016.
Al Jazeera's Dorsa Jabbari has more.

CORONAVIRUS: Worshippers returned to Islam's holiest site, Saturday, March 7, after Saudi Arabia temporarily lifted its ban on visitors to the Grand Mosque of Mecca, imposed to control the spread of coronavirus.
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The Justice Department charged two former Twitter employees with spying for Saudi Arabia last year. BuzzFeed reporter Alex Kantrowitz joins CBSN to discuss how they were able to do it and what the FBI investigation alleges.
Saudi Arabia kicked off an oil price war with Russia at a time when the world is dealing with the coronavirus outbreak decimating supply chains, inducing panic buying and grounding flights.

Saudi Arabia and Russia have been working together to prop up oil prices for the past three years but the two had a falling out over Riyadh's insistence that they agree to cut oil supplies by 1.5 million barrels a day.

The reason was simple. China, the biggest importer of oil, was turning back tankers as the coronavirus outbreak forced the economy to a standstill.

Oil prices had their biggest one-day crash since the 1991 Gulf War and there is more pain to come as Saudi Arabia and Russia flood the market with more oil. Goldman Sachs predicts oil prices could hit $20 a barrel.

Both nations should be able to stomach a protracted economic war, as Saudi Arabia has foreign exchange reserves of $490bn and Russia has reserves of $440bn.

Foreign reserves are important - without them an economy can grind to a halt, unable to pay for its imports and debts. This is where the situation becomes trickier.

Saudi Arabia may need to borrow money to fill the gap between what it spends and the revenue it receives. It needs oil prices of around $82 a barrel to balance its budget.

And Russia, according to the International Monetary Fund, needs oil at $42 a barrel.

But for economies weaning themselves off oil dependence, it means they have less money to spend in those areas.

What is at the heart of the fallout? Russia's anger over sanctions targeted at its oil giant, Rosneft Trading. Washington imposed the sanctions last month over its continued support in selling Venezuela's oil.

Moscow was hoping to get Riyadh on its side to inflict economic pain on US shale producers, who Moscow feels have been getting a free ride on the back of OPEC+ production cuts.

"They can't keep up this fight for long," Naeem Aslam, chief market analyst at AvaTrade, tells Al Jazeera, about the oil price war between Saudi Arabia and Russia.

He adds: "Why? Because it is killing the economies of both countries."

Shale production has pushed the United States into the number one spot as the world's biggest producer of oil. Moscow hopes it could lead to the collapse of some of those businesses, if oil prices remain below $40 a barrel.
Secretary of State Mike Pompeo arrives in Riyadh on Wednesday at a time of heightened tensions in the Middle East. Some issues on the agenda include tensions with Iran, the Trump administration's Mideast peace plan, the ongoing war in Yemen and human rights issues. VOA's Ardita Dunellari reports the meetings take place at a time when both countries are recalibrating their approach to open regional matters and to their bilateral relations.))

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