Saudis Target Iran, Russia in High-Stakes Oil War

Russia's economy is doomed. That prediction comes as oil prices and the value of Russia's currency have been plunging.

Some say Saudi Arabia is punishing Russia -- and Iran -- by playing a high-stakes game with oil prices.

A barrel of oil is now below $60 for the first time since May 2009, and that's good news for Americans who are actually smiling as they fill up at the pump these days.

But halfway around the world, for some of America's adversaries like Russia and Iran, plummeting oil prices are hurting -- and hurting bad. Both need oil prices to be above $100 a barrel to fund large parts of their economies.

The result: Russia is imploding. The ruble is in a free fall, down 50 percent against the dollar.

To stop the bleeding, Russia's central bank made a dramatic move Tuesday, raising interest rates from 10.5 percent to a whopping 17 percent. Add to this the bite of Western sanctions and the Washington Post says Russia's economy is doomed.

For the Islamic Republic of Iran, it's a similar story. Oil is also its lifeline.

"[For] the Iranians psychologically, their most valuable asset is depreciating in value," Mark Dubowitz, executive director of the Foundation for Defense of Democracies, told CBN News.

The result: Its currency dropped 6 percent against the dollar and its economy is getting hammered.

"If you are an Iranian policy planner and you are planning your budget and you are pegging oil at $120 and all of a sudden the price of oil is at $70 in the medium term, you've got some problems," Dubowitz said.

In the grand bazaars of Tehran, customers and businesses are feeling the pinch.

"When the nuclear talks failed to lead to a deal, the exchange rates started to go up," Sjojaee, a currency exchange operator, told CBN News. "In the last couple of days I think the decline in oil prices contributed to the rise in exchange rates again."

Both countries, in part, blame Saudi Arabia for their economic mess. As the world's largest producer and exporter of oil, Saudi Arabia has refused to cut supply to drive prices up.

But analysts say the Saudis have an ulterior motive in "playing chicken" with its oil: They want to punish Iran and Russia.

Saudi Arabia and Iran are longtime rivals. The Saudis believe U.S. attempts to stop Iran's nuclear threat are going nowhere so they're using their most effective weapon to do what Western sanctions couldn't.

Iran's president called the Saudi move to keep oil prices low "politically motivated."

President Hassan Rouhani told members of his cabinet last week that "Iran and people of the region will not forget such conspiracies, or in other words, treachery against the interests of the Muslim world."

Meanwhile, Saudi-Russian relations aren't that cozy either. Since the Syrian uprising started in 2011, the Saudis have wanted the Assad regime in Damascus to blame the Russians for propping it up.

So while Americans enjoy an early Christmas present at the pumps, Russians and Iranians are seething, wondering how long oil prices will stay low before their economies potentially collapse.