US-Saudi Agreements on the Use of the Oil Weapon

10-Jun-2015

The Evolution Of The Oil Weapon, In the age of derivatives, swaps, and electronic money transfers, a new form of warfare has emerged: financial warfare. 

Recently, the US has passed sanctions on countries such as Syria, Venezuela, and North Korea , but the majority of energy related sanctions passed have been targeted at Iran and Russia. 

An estimated 68 percent of Russia's government revenue is derived from oil and gas exports, while 80 percent of Iran's revenue comes from oil exports. That presents a very large target for the use of financial weapons. 

To understand why financial warfare is now so commonplace, one must understand how it came into existence and what has been achieved taking such an approach. 

The oil weapon first came into existence in 1956, when Egypt nationalized the Suez Canal. What resulted from this was a declaration of war by France, England, and Israel. As a way to counter this invasion, Saudi Arabia decided to ban exports to England and France. This embargo turned out to have minimal economic impact, as the US increased shipments to Europe, and international oil companies redirected shipments to England and France. 
(By John Manfreda - Oil Price, Al-Jazeerah, CCUN, June , 2015)