Tensions between Iran and Saudi Arabia are heating up as a result of informal Saudi sanctions designed to prevent Iran selling oil on world markets according to Anjli Raval in the Financial Times:
“Iranian vessels carrying the country’s crude are restricted from entering ports in Saudi Arabia and Bahrain, according to a circular sent by a shipping insurance company to its members in February… The notice said ships that have called to Iran as one of its last three ports of entry will also require approval from the Saudi and Bahraini authorities before entering their waters.”
Raval also cites evidence that Saudi Arabia is using its influence to deny Iran access to pipelines and to storage facilities in the Mediterranean.
The move comes in the wake of Iran’s refusal to participate in a proposed production freeze aimed at stabilising world oil prices. For now it may be paying off. Iran is thought to have 50m barrels of oil stored in tankers at sea, and has only managed to sell small amounts of oil in Europe.
At present, the Saudi approach is working because nobody wants to upset them at this point. However, it could backfire if Iran is left sitting on a large stockpile of oil when prices start to rise again – when upsetting Saudi Arabia will be less of a priority to importers.