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IN THE NAME OF ALLAH, THE BENEFICENT, THE MERCIFUL
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"O you who believe! Be careful of your duty to Allah, and be with the truthful." [Noble Quran 9:119]

"If you obeyed most of those on earth they would mislead you far from Allah's way." [Noble Quran 6:116]

Return to the QURAN only - the complete and final STAND-ALONE Divine Message which also contains the authentic sunnah of the beloved Prophet Muhammad (SAAW)

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I bear witness that NONE is worthy of worship except ALLAH, He has NO partner nor partners, and I bear witness that Muhammad is the slave and Final Messenger of Allah.

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Sunday, January 17, 2016

Iran: Lifting of sanctions


It's not only Bibi who is "licking his wounds." The House of Saud is in for a rough ride too.

For over 3 decades Saudi Arabia had the upper hand in its share of Asia's oil market. That prerogative will likely become history sooner rather than later as Iran prepares to produce up to a million barrels of oil a day! It will cause a greater drop in oil prices yet the analysis is interesting. While Saudi Arabia may boast it will boldly face the challenge in the oil market, attitude alone won't be enough for the Kingdom to win. Other than Iran's total independence in running its system, it has a hugely diversified economy unlike Saudi Arabia's crippling dependency on oil (and also its dependency on foreign workers for the maintenance of its economic infrastructure). Observers have surmised that if oil production was to stop in both Iran and KSA within the next 24 hours, KSA's immediate budget deficit would be nearly 60% overnight while Iran's would be barely 8% .. less than the deficit of Western countries. That puts Iran in a far more favorable position than Saudi Arabia to balance its national budget based on the current low oil prices.

While conducting the nasty proxy wars in Syria and Yemen on the political front, Saudi Arabia was also careless enough to kick-start a needless crude vs. shale revolution in the financial market. Threatened by the surge of shale customers the Kingdom adamantly refused to cut crude production to create an artificial oil glut, hoping that lower prices would help throttle the shale boom. Crude prices kept tumbling yet nothing worked as the Kingdom had anticipated. Initially shale took a slight hit. But as it got leaner, it also got meaner. It devised its own strategy to confront the falling price of crude and retain its clientele. However, the Kingdom (and de facto head of OPEC) is thrust into its own quagmire ... too late to return to its previous policies. Furthermore, with Iran back on the stage coupled with serious differences arising within the Saudi royal family, the Sauds can expect many a sleepless nights ahead of them.

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