That an imprudent US President Donald Trump has added to the Middle East turmoil in a highly critical manner is a fact. He has done so at a time when Iran and Saudi Arabia are locked in several proxy wars in the Middle East, including Yemen. Although he has not underscored the need for opening new battle fronts in the region, he has fomented economic tensions particularly among the two but rival oil producing countries in the region. "Just spoke to King Salman of Saudi Arabia and explained to him that, because of the turmoil & dysfunction in Iran and Venezuela. I am asking that Saudi Arabia increase oil production, maybe up to 2,000,000 barrels, to make up the difference," Trump said in a tweet. But there is a background to this tweet: the US exited from the nuclear deal between Iran and world powers in May and said it would re-impose economic sanctions on the Islamic republic and its business partners by November 4. On Tuesday, a senior State Department official described tightening the noose on Tehran as "one of our top national security priorities". The official warned countries, including China and India, who are key buyers of Iranian oil, that they should stop purchasing crude from the country before the November deadline or face US sanctions. European countries have been attempting to negotiate exemptions for their firms, but the official confirmed that the US President intends to stick to his deadline.
A strong Iran reaction appears to be quite plausible if not implementable after it announced that US efforts to block its oil exports and warned rival Opec producer it would never take Tehran's "place" on the international oil market. "We will surely do something to thwart the US rallying cry that Iranian oil (exports) must be stemmed... . The (Iranian) government has a plan and God willing we are certain that we will be able to sell as much oil as we want... . They're begging the Saudis to raise their output so that if Iran's quota decreases nothing will happen to the markets... . In this battle, any country that tries to take Iran's place on the oil market will be guilty of treason against Iran... and surely one day it will pay the price of this treason," First Vice President Eshaq Jahangiri was quoted as saying.
Iran possesses the second-largest gas reserves and the fourth-largest oil supplies, while Saudi Arabia is the world's biggest oil exporter. Tehran's energy plans have been hamstrung by lack of foreign investment for several decades. China, the largest importer of the Iranian crude, largely appears ambivalent towards US calls to halt imports of Iranian oil by November. Little does, however, Trump know, that his warning to Iranian oil importers has led to adding a new source of friction between Washington and Beijing. India, the second-largest importer of Iranian crude, seems to have succumbed to the US pressure. New Delhi, for example, has said that it will take all necessary steps including engagements with relevant stakeholders to ensure its energy security, even as the government has asked oil firms to start exploring alternative sources. Its oil ministry has asked refiners to prepare for a 'drastic reduction or zero' imports of Iranian oil from November. India seems to have taken this decision to protect its exposure to the US financial system. Be that as it may, it is about time the US revisited its decision of exiting the nuclear deal between Iran and world powers. Not only is Trump's November deadline decision aimed at strangling the Islamic republic's economy because crude has the largest share in its export receipts, it is fraught with grave consequences for all oil producing economies in world's most volatile region, and even beyond. Pakistan, a country that heavily relies on energy imports from Arabian Gulf sources and is witnessing massive infrastructure development activities under the China Pakistan Economic Corridor (CPEC) at this point in time, will be among the principal victims in the event of any disruption in shipping through the Strait of Hormuz.
Comments
Comments are closed.