ISLAMABAD – Regional rivals Saudi Arabia and Iran are currently directly orindirectly engaged in a number of Middle East conflicts, as well asopposing sides of the global oil trade.
*MILITARY SPENDING*
In the past five years, most Middle Eastern countries have been directly orindirectly involved in armed conflicts. About 32 percent of documentedweapon imports worldwidelink>areto this region.
Saudi Arabia has a significant budget for military spending, and althoughIran’s is harder to determine, according to Radio Farda, it is estimated at$7bn annually.
Saudi Arabia, in turn, spends about $56bn. This does not including recentdeals with Spain and the United Stateslink> worth anestimated $3bn.
Based on SIPRI’s 2017 reportlink>,Iran imported four air defence systems from Russialink> that are excludedfrom the arms embargo imposed on the country.
The United States remains the Gulf region’s main supplierlink>.Nearly 50 percent of the UK’s arms exports go to Saudi Arabia, according toSIPRI. Most of these imports are used by Saudi Arabia in its ongoing war inYemen link>.
The overwhelming majority of Saudi arms imports are from the US andEuropean countries.
*ECONOMY*
*Iran:*
Iran’s economy grew by 7.4 percent from 2016-17, a rise from the previousyear. The International Monetary Fund assessed in February 2017 that thisboost was a result of the expansion of oil production.
Navid Kolhar, a financial analyst in Tehran, agrees, adding that theeconomy’s upward movement was attributed to increasing trade inhydrocarbons.
The non-oil sector was barely one percent of total growth, and economicgrowth was mainly drivenlink>byIran’s exports, especially to the Asian market.
In spite of the recorded growth, economic difficulty persisted because ofstructural weakness in the financial system. Inflation, meanwhile, wasbrought down to 9.5 percent in 2016.
Given the nature of natural resource-dependent economies, however, theboost has not necessarily translated into greater job opportunities forordinary Iranians. The unemployment rate continues to hover around 11.4percent for the second year running.
*Saudi Arabia:*
From January 2017 to January 2018, Saudi Arabia recorded negative growthdespite efforts by authorities to diversify the economy and lessen itsdependence on oil.
The country, which possesses 22 percent of the world’s oil reserves, haspressed other OPEC members to cut oil production to boost global prices.But Saudi’s non-oil sectors continue to struggle, recordinglink>amere 0.6 percent growth, according to Bloomberg.
Saudi Arabia continues to work out how to sell five percent of itsstate-run oil producer Aramco – a deal that could raise more than $100bn.
The plan is at the heart of an ambitious economic reform programme to weanthe country off oil, which includes a new $500bn megacitylink>nearthe Red Sea. It is hoped the extra money from the sale will make SaudiArabia less reliant on its black gold in the long run.
*OIL PRODUCTION*
*Saudi Arabia:*
Based on OPEC’s data link>,the oil-rich kingdom is the largest exporter of petroleum, with its oil andgas sector contributing about half of its GDP.
In addition to petroleum, Saudi also exports natural gas, iron ore, goldand copper.
The kingdom produces more than 10 million barrels of oil per day whileconsuming three million domestically.
Despite being the largest oil exporter in the world, Saudi Arabia and otherOPEC member states were forced to slash production in an effort to restoreplummeting oil prices.
The price crash was the result of surplus US oil production, whichcurrently stands at about nine million barrels per day. This spurred Riyadhinto action as it attempted to expand and diversify the Saudi economy.
*Iran:*
Decades of economic sanctions on Iran have forced it to adopt amulti-faceted approach. Nevertheless, oil continues to account for almost80 percent of all exports.
According to Global Firepower, Iran currently produces more than fourmillion barrels a day, 1.8 million of which are for domestic consumption.
Foreign investors resumed trading with Iran in 2015 when sanctions werelifted under the nuclear deal with world powers, in return for which Iranagreed to curb its nuclear programme.
Between December 2015 and January 2016, as the nuclear restrictions on Iranwere being finalised, oil exports witnessed a two-fold increase to reachalmost two million barrels a day.
The numbers remained consistent throughout 2017, except for April that year.
Iran and Qatar co-own the world’s largest natural gas field, the offshoreSouth Pars/North Dome. Iran’s territory coverslink>3,700square kilometres in the Gulf.
France’s Total has invested in the natural gas market via the NationalIranian Oil Company and is helping develop South Pars.
Iran produces about 880 million cubic metres of gas a day, and it isforecast to increase production to 1.2 billion cubic metres by 2021,Iranian financial publication Finance Tribune reports. – Al Jazeera