Iran and the oil war

We can attribute most of the region’s wars to the conflict over oil, whether directly or indirectly. Today, we are in the midst of a huge regional oil war.

Iran wants to use oil against the West and Iran’s rivals want to use oil to suffocate it.

Iranian Vice President Eshaq Jahangiri threatened Saudi Arabia and the Gulf countries, albeit without naming them, and 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.”

Jahangiri’s statement came after the phone call between the Saudi king and the US president and in which they agreed on supporting oil stability.

US pressure

President Donald Trump said Saudi Arabia will support the stability of the oil market and raise output by 2 million barrels if needed.

Despite that, the decline of oil prices is the least of the Iranian regime’s worries, especially that its oil production capacity decreased as a result of the Trump administration’s quick strikes, such as preventing American oil companies and other companies from engaging in activities pertaining to exploration, production, shipping and insurance.

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Pressure on Tehran increased following the foreign tours of 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 ever since Trump’s economic war on Tehran. As a result, protests erupted again across Iranian cities as in the past three days there have been protests in Tehran over the deteriorating economic situation.

The rapid economic sanctions are very effective and they are certainly better than military confrontation which may erupt as a result of the Iranian regime’s expansion and foreign wars. With the deterioration of the government’s sources of income, Iran has actually begun to decline and this will mostly end with its collapse unless the government has the supreme leader’s approval to make great concessions. This is unlikely in the current phase and until the end of this year.

Running out of options

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

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Iran can sell its oil but in small amounts and for cheap prices, and it will immediately lose its main revenues which it uses to pay for the war in Syria and Yemen and of course in Lebanon. It is unlikely that it will stop paying the wages of its employees and fund subsidies of the citizens’ essential products as this will expedite the end of the regime, which has been sitting on hot tin for almost 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 refineries’ work and stopping oil exports, and the Shah’s exit became a domestic and foreign demand.

This article is also available in Arabic.

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Abdulrahman al-Rashed is the former General Manager of Al Arabiya News Channel. A veteran and internationally acclaimed journalist, he is a former editor-in-chief of the London-based leading Arab daily Asharq al-Awsat, where he still regularly writes a political column. He has also served as the editor of Asharq al-Awsat’s sister publication, al-Majalla. Throughout his career, Rashed has interviewed several world leaders, with his articles garnering worldwide recognition, and he has successfully led Al Arabiya to the highly regarded, thriving and influential position it is in today. He tweets @aalrashed.