Analyst's note: We already know that Al-Qaida is now targeting Saudi royals with jihad against Sunni Islam homeland. One can discuss the timing, but we can reasonably expect an “Arab Spring” uprising that completely disrupts Saudi oil production, the U.S. and the global economy would face a massive economic and strategic crisis here in the United States. We can also expect that Russia and Iran, as oil-producing states along with others, would exploit the resulting crisis to increase their power around the world while undermining U.S. influence, especially in the Middle East.
I trust you will want to read the entire original analysis.
" [....] In 2006, 2008, and 2010, The Heritage Foundation conducted simulations to assess the strategic and economic impact of a major disruption of energy supply caused by Iranian military action in the Strait of Hormuz or by coordinated terrorist attacks on key nodes in the global energy infrastructure.[2] This report uses the methodology developed in these previous reports and builds on their findings and models. It examines a situation in which an “Arab Spring” uprising disrupts Saudi oil production, causing a total cessation of oil production for one year—a drop of 8.4 million barrels per day (mbd)—followed by a two-year recovery. Given the recent events in the Middle East, U.S. and international policymakers should examine such a radical scenario, albeit considered unthinkable by some.
[....] To guard against the economic and strategic dangers, the U.S. should prepare emergency measures before such a crisis. Releasing strategic petroleum reserves in coordination with other countries, tapping the North American energy resources, and reducing domestic energy consumption would limit the impact of the crisis and facilitate recovery. However, it is also in the U.S. interest to use its influence and resources to assist allies and friends during the crisis.
" [....] A crisis in Saudi Arabia would have drastic implications for the United States, its economy, and the whole world. The optimistic scenario modeled here presupposes a one-year cessation of production followed by a two-year recovery. In the real world, the exact length of the recovery period is difficult to predict.
Gasoline prices would rise from $3.95 to more than $6.50 per gallon, petroleum prices would rise from $100 per barrel to more than $220 per barrel, employment losses would exceed 1.5 million jobs, and U.S. GDP would drop by a total of nearly $450 billion.
[....] The exodus of skilled technicians and oil workers exacerbates the situation by significantly delaying repairs of damaged infrastructure and impeding operation of oil facilities that are not damaged. As a result, nearly all Saudi oil production stops and oil exports are halted.
The new Islamist regime is reluctant to sell oil to the U.S. and European markets, preferring to sell to China and the Far East.
[....] employment averages 900,000 fewer jobs and GDP losses total nearly $450 billion, an average loss of $150 billion per year.
[....] countries pursue their perceived national interests first and worry about international cooperation later. [....]"
