Iran in Crisis: Between the US Pressure and Economic Plight

Date & time : Sunday, 8 July 2018

Abstract

Iran faces a complicated dilemma, so it seems more willing to use the oil in its hostile strategy toward its neighboring countries within the gulf region. One of the recent and direct example is the threatening by the President Hassan Rouhani to disrupt oil shipments from neighboring countries if Washington presses ahead with its goal of forcing all countries to stop buying Iranian oil. Such announcement was published on Iran’s presidential website the last week. The same meaning has been asserted within an answering a question about his countries tendency’s for such threaten in a news conference in Switzerland in the.

It wasn’t the first time; Iranian officials have previously threatened to block the Strait of Hormuz, a major oil shipping route, in retaliation for any hostile U.S. action against Iran.

The United States withdrew from the multinational nuclear deal and announced sanctions against Iran in return for curbs to its nuclear program. Washington threatened the other participated western states in the deal to halt imports of Iranian oil starting from Nov. 4 or face U.S. sanctions.

 

Oil Dilemma

Tehran warned to cut oil supplies, meanwhile the United Arab Emirates, in return, pledged to increase its own production in order to face any drop in oil international market, in addition to keep prices. So, the comments by Iranian President Hassan Rouhani and the unexpected announcement by the UAE’s oil-rich capital Abu Dhabi came as U.S. benchmark crude traded around $75 a barrel. Organization of Petroleum Exporting Countries OPEC decided to increase the cartel’s own production by 1 million in order to down oil prices. Such decision has already a direct influence on the upcoming congress election in U.S.A barrels a day has yet to tamp down prices.

“if we close our eyes for 24 hours, 1 million refugees will go toward Europe through our Western borders” Iran’s Interior Minister Abdolreza Rahmani Fazli warned from Turkey. Some 5,000 tons of narcotics also could be smuggled to the West, he added, according to the semi-official Fares news agency.

This hostile behavior from Tehran reflects an Iranian perception for its geostrategic unique position within multi-dimensional game in the Middle East. It is a major trafficking route between Afghanistan and Europe, as well as the Persian Gulf states. Meanwhile, the state-run Abu Dhabi National Oil Co. issued a surprise statement that confirmed that it has an oil production capacity of 3.3 million barrels per day. It added that it “remains on track to increase its production capacity to 3.5 million (barrels per day) by the end of 2018.”

U.S and “Zero” Iran Oil Exports

United States changed its position, after a vowing to cut Iranian oil exports to zero by Nov. 4. It would consider giving importing countries more time to scale back buying on a case-by-case basis as Washington argued.

Importers of Iranian crude have been hoping to be allowed to keep buying the oil as long as they reduced their overall purchases, in keeping with the past American practices, but recently Washington showed a little patience. So, oil prices has been rose in response.

On the American side, a senior official in State Department tried to soften the strict tone, saying the U.S. is working to minimize disruptions to the global oil market while increasing the pressure on the Iranian government, as The Wall Street Journal’s Jessica Donati reports.

Brian Hook, a director of policy planning, reiterated the U.S. position that Washington doesn’t seek to grant licenses or waivers as it works to eventually cut Iranian oil exports to zero. “we are prepared to work with countries that are reducing their imports on a case-by-case basis.” Hook said. Washington put sanctions on 53 individuals and entities since President Donald Trump withdrew from nuclear deal with Iran, Hook added.As a result to U.S threatens, more than 50 international firms have already announced their tendency’s to leave the Iranian market.

 

The Indian Alternative

Iran’s biggest oil buyers announced they has alternative sources of crude to replace any supplies cut off by U.S. sanctions on the Persian Gulf states even if shipments stop completely. Indian Oil Corp. Chairman Sanjiv Singh says Saudi Arabia alone can cover most of the world’s supply shortfall in case Iran’s oil exports dry up. In addition a narrowing spread between Brent crude and Dubai oil gives Indian Oil even more alternative, the head of the state-run refiner known as IOC, one of Iran’s largest customers.

“We have a very wide crude basket. There’s nothing we can’t procure, there’s nothing we can’t process. So, even if Iran supplies get disrupted, the supplies to the Indian market will still continue. That’s assured.” Singh said

In response President Donald Trump’s Some Asian customers are already considering acquiescing his call to cut trade with Iran by early November, when sanctions aimed at curbing the Islamic republic’s nuclear program come into effect. Several refiners in the largest oil market are looking at alternative supplies from Saudi Arabia to Iraq after the White House said it won’t offer extensions or waivers to U.S. allies.

 

Iran Protests

Over the last few months popular riots were sweeping Iran as a result to crisis shattered Iranian economy and the widespread corruption. Demonstration in the streets are a sign of discontent that may spread as the pressure from renewed U.S. sanctions increases.

No Iranian city was far from demonstrations, the latest one was the upheavals centered in the southwestern city of Khorramshahr over the weekend. Hundreds of protesters gathered in a public field to denounce the corruption and chanting anti-government slogans as “In the Name of Religion, They Plundered us.” Protests also broke out in nearby Abadan.

Such demonstrations were part of a larger pattern of discontent with the ruling theocracy in Tehran. In December and January, demonstrations erupted in more than 100 cities and towns over inflation, joblessness and graft. Women staged hijab protests, ripping off their veils. In March farmers from Isfahan province in central Iran protested long droughts. In May truckers went on a nationwide strike to protest stagnant wages and rising costs.

 * Political Studies Unit

References

1.Debjit Chakraborty and Unni Krishnan, India Has ‘Plan D’ for Iran Oil After Trump Adds Sanction Pressure, Avaliable, https://bloom.bg/2KSHrx

2.NASSER KARIMI AND JON GAMBRELL, Iran issues oil warning as UAE says production can rise, Available at; http://bit.ly/2KVRjGq

3.Iran Threatens to Disrupt Oil Shipments From Neighboring Countries, available at http://bit.ly/2KQenX3

4.The Editorial Board, Iran’s Persistent Protests, Available at; https://on.wsj.com/2KQeAcN

5.Ruth King , Iran’s Persistent Protests More demonstrations as the regime scrambles to beat new sanctions, http://bit.ly/2NDhAbg

 

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