Tuesday, October 26, 2010
Iran Takes Over OPEC
Iran is soon to be the president of opec again. And the implications could be enormous. An international oil dispute is virtually sure to erupt, says one Russian analyst. It is only a matter of how soon. But this time, he says, it is not America’s fight—it is Europe’s.
On October 14, Iran was elected president of the Organization of the Petroleum Exporting Countries—and that says a lot about how the world is changing.
America’s global clout and influence is clearly on the wane. And not just because opec—a grouping of nations that includes many anti-American states—elected perhaps the biggest anti-American state to its presidency. But because, as rtt News said, it did so “unanimously”!
How’s that for friends? America liberates Kuwait from Saddam Hussein, it props up the Iraqi government, it sells Saudi Arabia $60 billion worth of upgraded F-15 fighters—and in return gets a diplomatic slap in the face. Don’t forget that America is working overtime to try to build a coalition to enforce sanctions on Iran for continuing to pursue nuclear weapons.
Can’t be working so well when even America’s so-called allies don’t seem to be on board.
Making the slap sting all the more is the fact that Iran’s Oil Minister Seyed Masoud Mirkazemi will hold the opec presidency. Merkazemi is a senior-level commander within the Iranian Revolutionary Guard Corps—a group considered a terrorist organization by the State Department.
So opec is now chaired by not only a terrorist-sponsoring nation, but by an actual terrorist.
It is clear the Arabs dread offending Iran a lot more than they do America. Fear of Iran is infecting the Persian Gulf. And the Arabs should be afraid. America has broadly advertised that it will be pulling out of Iraq and Afghanistan soon, never to return. The Arabs will be left to deal with (read submit to) Iran.
Iran is acutely aware that America is a broken superpower.
The same day the 12 opec nations meekly handed Iran the presidency, Iranian President Mahmoud Ahmadinejad visited his Hezbollah underlings in Lebanon. It was his first trip to the country, and he used the fanfare to send a message. “The whole world knows that the Zionists are going to disappear,” he said. “The occupying Zionists today have no choice but to accept reality and go back to their countries of origin.”
Although most took his words as a threat toward Israel, it was also a message to America—and to Iran’s opec subordinates.
The message was: We are the regional power you really need to fear. No matter how much America promises, at the end of the day, it is going home. You had better deal with us.
With the Iranian-aligned Muslim Brotherhood poised to seize power in Egypt, with Turkey developing closer ties to Iran, and with America cooling its relationship with Israel, it is no wonder opec is snapping into line with the king of the Middle East.
But what exactly is Iran’s agenda? Is it $100-per-barrel oil? $150? Is it to use opec as a podium to vocalize its anti-West rhetoric? Or does it go beyond that?
Iran will certainly work to increase oil prices, says Russian Center for Public Policy Research director Vladimir Yevseyev. In this regard, it will probably have some success, he says, but Iran has a far bigger battle lined up.
According to Yevseyev, the real war Iran is gearing up for is against Europe.
As head of opec, Iran will leverage its position to counter the policy of the European Union, which has been complicating Iranian oil sales. “I do not believe that it will be effective, but Iran must take such attempts,” he says.
Europe has recently begun taking further steps to restrict trade and foreign investment in Iran due to Iran’s pursuit of nuclear weaponry. On September 30, four of Europe’s largest oil companies (Total, Shell, Statoil and Eni) announced they had committed to stopping business with Iran.
The situation is getting touchy. Iran has now given ultimatums to other European oil firms. Either commit to business in Iran or prepare to have your assets seized.
Iran has other weapons too.
Europe depends on imports for the vast majority of its oil. Germany, the Netherlands, France and Italy import almost 100 percent of their oil. Nearly half of Europe’s imported oil comes from the Middle East. And most of that comes through the Persian Gulf—which is half Iranian coastal waters.
“Security of energy without Iran has no meaning,” opec’s new president warned on October 14. The international community and Europe in general should take close note, he said.
It wouldn’t take much to send the cost of crude oil soaring. Global estimates suggest that due to depletion, over the next 5 to 10 years the Middle East is going to become the world’s most valuable source of oil. Iran is predicted to be one of the few countries with excess oil supplies.
“[T]he political risks are rising,” says Russia’s Yevseyev. “I do not see the way how this situation could change, as I do not see grounds for a rapprochement between Iran and Europe.”
“Europe looks at Iran’s presidency of opec as a problem with which it will fight, but not as the possibility of rapprochement with Iran,” he said (emphasis mine).
Yevseyev is right. Rapprochement with Iran will not occur.
The Middle East has the oil. Europe needs it. Iran wants to use it as a tool to push Europe. Europe wants to stop Iran from getting the bomb. America just wants out. Both Iran and Europe want in. The rest of opec balances on nitroglycerine—not wanting to offend Iran, and enjoying higher oil prices—but also looking on with apprehension at a withdrawing America and with interest at emerging European aggressiveness.
In an oil-constrained world, Iran believes its position is impregnable. As opec’s second-largest producer, it has the oil, and it is now leveraging its position within opec to push its agenda and try to attain nuclear capability. Yet a nuclear-armed dominant Iran is not something Europe wants to live with either. This is not a recipe for peace in the Middle East.
Tensions are escalating even faster than the price of oil, if that is possible.
But where is it all headed? Will Europe acquiesce to Iran’s pushy foreign policy? And how will the world’s oil problems be solved? For the answers to these questions, read The King of the South and “Why Iran Can Afford to Be So Bold.” •
Posted by Crude Oil Daily at 1:37 PM
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