Iran and the Oil War

Iran and the Oil War

Tuesday, 3 July, 2018 - 18:15
Abdulrahman Al-Rashed
Abdulrahman Al-Rashed is the former general manager of Al-Arabiya television. He is also the former editor-in-chief of Asharq Al-Awsat, and the leading Arabic weekly magazine Al-Majalla. He is also a senior columnist in the daily newspapers Al-Madina and Al-Bilad.
We can attribute most of the region’s wars, whether directly or indirectly, to the conflict over oil. Today, we are in the midst of a major regional oil war, which Iran wants to use against the West and which its adversaries want to use to stifle it.

Iranian Vice President Eshaq Jahangiri had threatened Saudi Arabia and the Arab Gulf, without naming them, when he said: “Anyone trying to take away Iran’s oil market (share) would be committing great treachery against Iran and will one day pay for it.”

His statement came shortly after a telephone call between the Saudi king and the US president in which they agreed to support the stability of the oil market. President Donald Trump said Saudi Arabia will support the stability of the market and raise output by 2 million barrels per day if needed.

The drop in oil prices, however, is the least of the Iranian regime’s concerns, especially given that its oil production capacity has been weakened after a series of blows dealt to it by the American administration. Washington has prevented American oil companies and other firms from carrying out drilling, production and shipping operations.

Pressure on Tehran increased with the foreign tours by the US Secretary of State and the retreat of major markets, like India, from buying Iranian oil. The Iranian rial hit an all-time low with Trump’s launching of his economic war on Tehran. This reignited rallies in Iranian cities in protest against the poor economic situation.

The rapid economic sanctions are very effective and are certainly better than military confrontation, which may erupt as a result of the Iranian regime’s expansion and foreign wars. With the dwindling of the government’s sources of income, Iran has indeed started to decline in what may end with its collapse if it does not garner the approval of the supreme leader to make major concessions. We can rule out this option at the moment and until the end of the year.

The Iranian VP’s threats are directed at Saudi Arabia because it ruined its ability to resist the boycott, while meeting the needs of Iran’s markets, like India. By increasing production, Iran will also fail in playing its only card against Washington, which is that the lack of supply could have forced the Trump administration to back down on its oil embargo against Iran.

Iran can sell its oil, but in small amounts and for cheap prices. It will immediately lose its main revenues, which it is using to fund its war in Syria, Yemen, and, of course, Lebanon. It is unlikely to stop paying the wages of its employees and finance subsidies of the citizens’ essential products, because this will quicken the demise of the regime, which has been sitting in a precarious position for nearly a year and a half now.

The oil game is important in the American-Gulf-Iranian war. Perhaps it’s the strongest weapon in the strategy to pressure Iran to back down and accept the US’s 12 conditions or it may later lead to the collapse of the regime. Let’s not forget that it’s through oil that Ayatollah Khomeini reached power when the movement that opposed the Shah succeeded in halting work at refineries and stopped oil exports, and the Shah’s departure became a domestic and foreign demand.

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