03 November 2016
By INU Staff
INU – On Tuesday, Hellenic Shipping News reported that a Dutch firm was in talks with prospective Iranian partners over a project to upgrade and develop floating oil terminals in the Persian Gulf. The report was indicative of the ongoing push by some Western entities to engage with and invest in the Islamic Republic, in spite of lingering obstacles and Iran’s persistent anti-Western activities and rhetoric. But perhaps the more significant aspect of that report was relevant not to Iranian-Western relations but to Iranian-Arab relations.
The report quoted Seyyed Pirouz Mousavi, the managing director of the Iran Oil Terminals Company, as saying that the Islamic Republic had already renovated the operations at virtually every step in the oil supply chain and had thus succeeded in returning its daily oil output to pre-sanctions levels. This claim stands in contrast to that put forward by the Oil Minister and other Iranian officials, who maintain that Iran’s oil production increased rapidly following the implementation of the Joint Comprehensive Plan of Action but leveled off somewhere just below the figure that Tehran had set as its pre-sanctions benchmark.
The discrepancy is significant, largely because the more common claim – that the Iranian oil industry still has some ways to go in order to reclaim former market share – has been presented by the regime and its business affiliates as justification for non-cooperation with the Organization of Petroleum Exporting Countries, of which Iran is one of 14 members. On Monday, the Wall Street Journal reported that this situation was definitely continuing, as both Iran and Iraq had disputed OPEC’s estimates of their output, and would therefore not agree to any freeze or reduction as OPEC strives to raises prices that remain at about half what they were last year.
Another report elaborated upon this situation on Wednesday in a report that cited five distinct factors in Iran’s decision not to cooperate with the oil cartel. The desire to recoup losses incurred during the period of US and EU sanctions is certainly one of those factors, as are the impulses to attract foreign investment and to demonstrate the value of last year’s nuclear agreement between Iran and six world powers.
The report also calls attention to the well-publicized and by most accounts intensifying conflict between Iran and Saudi Arabia, which leads OPEC and is thus the most prominent voice in setting the organization’s oil policy. It is little surprise that Iran has been resistant to abiding by Saudi-led plans for its oil industry, especially in light of the last factor cited by Al Monitor, the apparent ability of Iran to weather lower prices than its competitors, thanks to the diversification of its economy under the sanctions regime.
The competitive, or even combative, aspects of Iran’s decision-making may help to explain the discrepant reports over its current output levels. In other words, Mousavi’s acknowledgement of the reclamation of pre-sanctions levels may have been a deviation from official claims that are maintained specifically for the sake of justifying non-cooperation with OPEC. This would in turn explain the sorts of discrepancies among OPEC estimates of Iran’s current oil output, estimates by independent industry analysts, and estimates by the Islamic Republic itself.
An alternative explanation is that Iran truly is struggling to reclaim market share beyond a certain level. But if this was the case, then it stands to reason that Iran would be more willing than it has been to give additional incentives to buyers and investors. On Wednesday, the Iran Project reported that the Iranian Oil Ministry had rejected requests to that effect by potential Indian investors.
Considering that Iran is already underselling some of its competitors and may be holding down global oil prices by refusing to cooperate with OPEC, it would appear that the speedy resolution of its supposed market share deficiency would be beneficial to everybody. But this ceases to be the case if Iranian leaders consider it most to their benefit if they not only boost their own oil industry outcomes, but cut into those of Saudi Arabia and its allies.
It is easy to imagine that Tehran maintains this point of view, and also that its Arab adversaries are aware of it, in light of the steadily accumulating indicators of worsening animosity between those two sides. On Tuesday, Arab Newsreported that an Arab news outlet based in Egypt had run an advertising campaign that sought to tap into anxiety over growing Iranian influence in the region.
One series of billboards that was installed as part of that campaign depicted Iranian Supreme Leader Ali Khamenei taking a selfie with Arab landmarks in the background. The intended message was reportedly that Tehran was looking at the Arab world with an eye toward owning large portions of it, although Arab News reports that the message was misconstrued by much of the population, thereby leading to the resignation of the head of that news outlet.
Still, this reaction arguably underscored the extent of Arab anxiety about Iranian influence, in that the public regarded those billboards as a criticism of permissive Egyptian policies toward the Islamic Republic, which threatened to allow Iranian influence further into the region.
Other warnings about that influence have been considerably clearer. For instance, the Turkish news outlet Baaghi reported on Wednesday that officials at Turkey’s Saudi embassy had reiterated preexisting accusations about Iran’s role in the Yemeni Civil War and the increasingly far-reaching attacks by the Houthi rebel group. In October, those rebels launched their deepest missile strike into Saudi territory and soon thereafter launched three missiles toward American warships in the Red Sea. Analysts have concluded that these sorts of incursions are only possible thanks to Iranian weaponry, and the US Navy has indicated that former shipments of this weaponry had been turned back when clearly on route from Iran to Yemen.
The war in Yemen is to a great extent a proxy war between Iran and Saudi Arabia, and that conflict has a long history and a wide geographic reach that occasionally penetrates the principal countries themselves. In January, an Iranian mob sacked and burned the Saudi embassy in Tehran, following Iranian propaganda broadcasts regarding the Saudi execution of a Shiite dissident cleric. Some reports indicated that security forces had been present alongside the mob but failed to intervene for upwards of an hour.
On Wednesday, Al Arabiya reported upon the Iranian judiciary’s lax response to the incident, which promised to contribute to accusations that the regime either contributed to the attack or deliberately instigated it. In October, the regime released the acknowledged mastermind of the attack, Hassan Kord Mihin. Thus, he joined 154 other individuals who were acquitted within two months of apparently taking part in the attack. Now, 20 more individuals supposedly remain in detention, although the Iranian judiciary has declined to release their identities or describe the charges against them.
Tehran is also accused of having delayed their case by several months. Meanwhile, Mihin has indicated that members of the Iranian Revolutionary Guard Corps and the Basij civilian militia had joined in his mob, a claim that is supported by the known affiliations of some of those who were acquitted in March.
The IRGC is regarded as a particularly hardline faction of the Iranian regime, and its influence over the regime as a whole has apparently grown in recent years. This is reflected both in IRGC-led domestic crackdowns and in provocations by the IRGC’s paramilitary forces against the US Navy and other traditional “enemies” of the Islamic Republic. The organization is also estimated to control the majority of Iran’s GDP, providing it with incentive to keep foreign investment partially at bay and to resist cooperation with the enemies targeted by the IRGC’s military propaganda.