International relations are not as simple as it may seem, they require an in-depth understanding and the art of dealing with other nations. Particularly, techniques of lobbying and pressure tactics have gained immense importance in today’s political affairs among different nations. This article focuses on the oil production, prices and politics all of which require a delicate balance. In this context, the US is urging oil producing countries to increase output except Iran. This move by the US seems a deliberate effort to keep Iran out of the market and its tactics are aimed at persuading its allies not to import Iranian oil as a way to exert pressure on the Iranian regime following Washington’s withdrawal from the Joint Comprehensive Plan of Action (JCPOA). Iran holds the fourth largest reserves of oil and exports 60 per cent of its oil to Asian markets. The leading importer of Iranian oil is China, while India stands second. However, Donald Trump has directed all importers of Iranian oil to stop by November this year.
It is likely that after recent developments, Riyadh will replace the vacuum of oil supply in the market by increasing its oil production to 200 million barrels per day.
President Trump is trying to spread a narrative among the allies of the US in the Gulf to press Iran further for a better nuclear deal. To make this happen, it would be strategically viable for the US to hit the Iranian economy by practically controlling the exports of Iranian oil to other countries. India has already begun to find ways to cut its dependency on Iranian imports due to US pressure because it cannot afford to make the US unhappy thanks to the White House’s backing in South Asian political dynamics. It is important to mention here that the US South Asian policy clearly stated that Washington will favour a greater role of Delhi in Afghanistan. Now as the US is building constant pressure around Iran by waging an economic war, India is ready to comply with the its demands. Another member of the OPEC that is going to play an important role in conduction of US economic raids against Iran is Saudi Arabia, the country with the largest oil reserves. It is likely that after recent developments, Riyadh will replace the vacuum of oil supply in the market by increasing its oil production to 200 million barrels per day. Iran is presently supplying two per cent of crude oil in the international oil supply. The present US moves against Iran cannot be comprehendible without understanding the regional dynamics of the Middle East.
It is imperative to look at the geo-politics of the Middle East as many actors in the region are playing a crucial role at many fronts to isolate Iran in the region, and Saudi Arabia is one of these key players. On the other hand, developments in Vienna may create an impasse with Washington even though the US State Department clearly stated that it will make other countries comply with the US demands against Iran. Nonetheless, Iran has allies within the OPEC that are completely satisfied with high prices of oil, particularly Venezuela and Nigeria. High prices for these countries mean large profits and revenues for these countries to deal with their own domestic problems, especially Venezuela, where the crippling economy has outpoured protest in recent past and oil exports are its life line.
In addition to this, the support of the European Union for higher oil prices may pose serious concerns among the key electorate in the Midwest during American mid-term elections in coming months. This move is not an isolated incident; rather, it is a reaction to Trumps’ tariffs against EU announced a month ago. In this regard, Saudi Arabia and United Arab Emirates are acting as torch bearers of Trump’s rhetoric of lowering oil prices. Riyadh is following the policy of US appeasement because it knows that its capital reserves will help the country in its quest for supremacy and survival in the Middle East. Both countries are resonating the US to cripple Iran economically as it will turn the tide of geo-politics in their favour.
Riyadh is following the policy of US appeasement because it knows that its capital reserves will help the country in its quest for supremacy and survival in the Middle East.
Another aspect that is likely to effect the global oil market is the launch of ‘Petro Yuan’ by China in March this year. Currently it accounts for 12 per cent of total global oil market equalling US Dollars 14 trillion. It is expected that by the end of this year, it will account for 50 per cent of global oil market and that may undermine the ‘Petro Dollar’ enormously. Under this ‘Petro Yuan’ phenomenon, it is anticipated that the US efforts to cripple Iranian economy will not hurt Tehran because China is Iran’s major importer and Beijing will likely conduct trade using a gold-backed Yuan. Apart from this economic perspective, the lobbying of other Gulf states with US against Iran is a result of the arched Iranian foreign policy in the region. The large Iranian influence in the Middle East is also a driving force behind the gradual pressure from the US backed by Saudi Arabia, the UAE and Lebanon. In Iraq, the US is now second only to Iran but Tehran’s domination has been evident during the recent negotiation between Shia warring groups and the Iraqi government which is being mediated by General Qasim Suleiman, backed by Kurds from Iran. Tehran’s presence in Yemen, its coalition with Russia, Bashar al-Assad and Iran in Syria; and lastly, the support of Hezbollah in Lebanon, are all explicit of Iranian capabilities in the region. This Iranian domination in the region is a serious concern for US and other Gulf states.
The lobbying against Iran through economic sanctions, aimed to strangle Iranian economy may exacerbate domestic problems like unemployment and high inflation. This may help in creating internal unrest in the country which may spur movements that will try to topple the Iranian regime, much to the relief of the US and its closest allies.