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Iran Awaits Magical Solution to US Oil Sanctions

Iran Awaits Magical Solution to US Oil Sanctions

Tuesday, 2 October, 2018 - 08:15
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.

Iran currently has a fleet of supertankers roaming the seas, in what looks like the “last six weeks voyage” before the re-imposition of the second round of US sanctions. A few days ago, multiple sources noted the disappearance of 10 monitored Iranian vessels, each of which was carrying up to 2 million barrels of oil. These vessels have become untraceable, as they are believed to have switched off their transponders to make it more difficult for the “enemy” to track their movements.


So Tehran’s game of “hide and seek” is on again, as it is trying to keep its oil sales hidden, with the deadline looming for US sanctions against buyers of the forbidden oil.


Oil is among the strongest weapons; which is why directors of oil companies have to step aside and let politicians handle its management. The Iranian regime is highly dependent on oil in managing the affairs of its republic. Around 50 percent of its budget comes from external oil sales, and more than 30 percent is collected from fees and taxes, in which oil plays a big role. In addition to that, primary goods like bread and cheap fuel are also supported by oil’s US dollars. This, of course, is the case in most of the region’s oil-exporting states. However, Iran is the only state facing a ban, and it will encounter difficulties in selling 2.5 million barrels per day due to the US sanctions.


Even with the transponders being switched off, monitoring ghost tankers will not stop through ground-based and satellite tracking systems, in order to uncover who will buy, how much they will pay, the payment mechanism and the extent of the ban’s violations. In the meantime, Iran hopes to sell crude oil to Russia, which will sell it on the market after refining it. China is expected to be among the buyers.


The sanctions have been preceded by preparations by major oil-producing states to fill the supply gap of Iranian oil, and prevent fears and rumors from causing a sharp increase in prices that damages the global economy.


Oil is Iran’s weapon just as it is the Americans’, with Tehran hoping that the sanctions will cause an increase in prices. The price has already gone up to more than $80 per barrel, and hitting $100 is not unlikely. In fact, the oil price set a record 10 years ago when it reached $140. Such a sharp increase may force the Americans to back down and, thus, lose their strongest weapon.


However, Saudi Arabia is the only state that can beat Iran in meeting the supply needs of buyers; which means controlling prices and foiling Iran’s scenario of spreading panic through high price rise.


Anyway, let us not rush to conclusions. Because even if Iran’s revenues tumble, it may still refuse to bend and accept the 12 American conditions set for talks; which include abandoning its nuclear project and refraining from foreign military interventions.


Things are not as simple as that. The Iranian regime is an extremist theocratic regime imbued with a military security ideology that resembles that of the Ba’thist party of Saddam Hussein. As we recall, that regime faced long-term international economic sanctions, and yet it refused to change course, despite the suffering of its people, with money financing only the regime’s activities.


Tehran’s regime will adopt the strategy of waiting for a magical solution, leaving its people to suffer. On the opposite side, Washington is aware that Ali Khamenei’s regime’s dwindling revenues will reduce its military capacities and weaken it internally. This is when the “wait and see” becomes everybody’s game, but for the Iranian leadership, it remains a dangerous gamble.


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