If Iraq can get its act together and start living up to its full oil production potential, then it won’t be just Saudi Arabia who’ll be in deep trouble… Iran will be screwed on multiple fronts.
Countries like China have resisted piling more sanctions onto Iran over its nuclear programme partly for fear of jeopardizing Iranian energy supplies. These could suddenly look less crucial. Iran’s oil industry suffers from a lack of investment and technology. It needs the skills and money that the oil majors now look likely to lavish on Iraq. And Iran, more than its Gulf neighbours, relies on high crude prices to sustain a wobbly budget and buy support at home. Perhaps all this explains the warning shot Iran fired last December, when it sent soldiers across the Iraqi border and briefly occupied a well in the Fakka oilfield. [In Iraq]
Thus, oddly, both Saudi Arabia and Iran could share a common interest in keeping a lid on Iraqi production growth going forward. Else one will lose their oil production crown while the other will lose its largest ally-by-necessity China.