Tension in the Gulf
The Kingdom of Saudi Arabia recently executed 47 people on terrorism charges, including a Shia religious leader who had spent a decade studying theology in Iran. The executions angered Shia adherents in Iran, who retaliated by attacking the Saudi Arabian embassy in the Iranian capital of Tehran just hours later.
As a consequence, Saudi Arabia severed diplomatic ties with Iran and gave Iranian diplomats in the country 48 hours to leave Saudi Arabia. Gulf Arab states rallied dutifully behind Saudi Arabia. Sudan and Bahrain cut diplomatic ties with Iran, while the United Arab Emirates said it would scale back its diplomatic relations with Tehran. Kuwait recalled its ambassador to Iran earlier in the day. At the same time, Iran’s ambassador to Kuwait received a protest note following the attacks on Saudi diplomatic missions. Oman stands apart from its Gulf Arab neighbours in keeping a cordial, even collaborative, relationship with Iran, much to the chagrin of its Gulf Arab partners.
The biggest divide separating the two countries involves competing branches of the religion of Islam. Saudi Arabia represents the Sunni branch of Islam, while Iran represents the religion’s Shia branch. Sunni and Shia Muslims do not only disagree with one another, each side believes the other is wrong to the point of evil. It is a religious divide that has been brewing for 14 centuries.
No doubt, tensions between Iran and Saudi Arabia will sharpen divisions between Sunni and Shiite Muslims across the Middle East, increasing fears of an armed conflict. History tells us this kind of action can be a prelude to war. It’s not a given that Saudi Arabia and Iran will resort to armed conflict, but the official cut-off of diplomatic relations is a serious escalation of tensions.
Middle Eastern security and world oil prices have always been intertwined. Such an incident could ignite a war that could close the Persian Gulf to oil traffic for months, if not longer. If that happens, we probably would see crude oil prices head well north of $100 a barrel overnight. If that happens, oil prices may remain high depending on how much commodity traders fear a prolonged oil supply disruption in the region.
Should Saudi Arabia and Iran refrain from armed conflict, an economic war could ensue. Saudi Arabia may choose to hurt the Iranian economy by flooding the world market with even more oil. If that happens, oil prices may sink to $15 per barrel.
The Saudi-Iran feud also poses a threat to Iraq’s effort to combat the Islamic State (ISIS) as the heated conflict threatens to inflame sectarian tensions across the entire region. Iraq, in particular, finds itself in a difficult position with a central government aligned with the United States and Iran. Iraq’s prime minister, Haider al-Abadi, has treaded carefully, cautiously condemning the execution, but not heeding calls from Shiite protesters to cut diplomatic ties with Saudi Arabia.
Both Saudi Arabia and Iran are major crude oil producers and face each other across the Persian Gulf. What separates these two nations, however, is much more than a body of water. The two countries are serious economic, political, military, and religious competitors.
The two countries must tread carefully and de-escalate the tension to avert plunging the region and possibly other parts of the world into a war. Western nations and other Gulf countries should also rally around to mediate between the feuding countries to bring lasting peace to the Middle East.