When it was signed four years ago, the Iran nuclear deal was widely perceived as a diplomatic triumph, a move that would help reintegrate Iran into the global economy and restore its relations with the West. Things haven’t quite turned out that way, however.
U.S. crude oil and energy product exports surged to an all-time high in the third week of June, making the country a net exporter of oil and products for the third time since November 2018. This change lends credence to American officials’ presumption that amid growing U.S.-Iran tensions in the Persian Gulf, Washington is less compelled to police oil transit routes in the region, especially the Strait of Hormuz, than it was during the 1980s. However, while the U.S. is less reliant on oil imports than in the past, it still remains dependent on Gulf producers, albeit in different ways.
In this week’s Monday Briefing, MEI experts Alex Vatanka, Gonul Tol, Gerald Feierstein, Marvin G. Weinbaum, Rauf Mammadov, and Robert S. Ford provide analysis on recent and upcoming events including Iran’s announcement that it has exceeded its enriched uranium limit, Turkey’s purchase of Russia’s S-400s missile defense system over American objections, an Emirati announcement that it will downsize military involvement in Yemen, the resumption of intra-Afghan peace talks, Russia’s continuing embrace of OPEC+ oil production cuts, and the emergence of potential threats to Tunisia’s democracy.
Competition for security and energy is at the center of recent developments in the Eastern Mediterranean. Countries from Egypt to Turkey are moving to secure, exploit, and market their (not always fair) share of the game-changing offshore natural gas reserves. Russia, China, and Iran are securing port facilities, and in the case of Russia, drilling rights, in Lebanon and Syria.
In late May, Saudi Aramco signed an agreement to buy 5 million tons per annum of liquefied natural gas (LNG) from San Diego-based Sempra Energy’s planned LNG terminal in Port Arthur, Texas. The deal exemplifies Saudi Aramco’s determination to boost the share of LNG and petrochemicals in its portfolio before its long-awaited public offering in 2021.
Iran’s huge hydrocarbons reserves and Turkey’s growing demand for oil and gas seem to suggest great potential for energy collaboration. US sanctions and pricing disputes, however, limit and complicate the prospects of such a partnership.
In this week’s Monday Briefing, MEI experts Paul Salem, Jonathan M. Winer, Robert S. Ford, Mirette F. Mabrouk, and Charles Schmitz provide analysis on recent and upcoming events including the current uprisings in Algeria and Sudan, General Hifter’s effort to take Tripoli, the hirak protest movement in Algeria, the strategic partnership between Egypt and the U.S., and cracks in the coalition of President Hadi in Yemen.
Paul Salem
President
In this week’s Monday Briefing, MEI experts Robert S. Ford, Mirette F. Mabrouk, Nathan Stock, Marvin G. Weinbaum, and Jean-François Seznec provide analysis on recent and upcoming events including the government shakeup in Algeria, Egyptian President el-Sissi’s visit to Washington, rocket attacks from Gaza, Imran Khan’s war against poverty, and a $69 billion merger between Saudi Arabia’s oil and chemical giants.
Russian Foreign Minister Sergei Lavrov made a four-day trip to the Gulf in early March, stopping in Qatar, Saudi Arabia, Kuwait, and the UAE as part of a broader effort to boost Moscow’s ties with the region. Although the Gulf monarchies are traditionally considered of some of the U.S’s closest allies, relations between Russia and the Gulf have improved in recent years and there is potential for further cooperation going forward.
Although the Gulf is not highlighted on the official map of China’s Belt and Road Initiative, it is one of the main regions where the BRI is being implemented. On the occasion of President Xi Jinping’s speech at the 6th Ministerial Conference of the China-Arab States Cooperation Forum in June 2014, he declared the regional countries as being “natural cooperative partners in jointly building the BRI.” Since then, Chinese state and private firms, banks, and financial institutions have embarked on efforts to advance the BRI in the Gulf, particularly in the energy sector.
Disagreements between Baghdad and the Kurdistan Regional Government over oil policy have been one of Iraq’s most stubborn problems. Resolving this issue would allow for better development of natural resources, generate more revenue that’s badly needed for reconstruction, and might potentially deflate competing claims to disputed territories.
While OPEC and Russia-led non-OPEC members agreed to cut oil production last week by 1.2 million bpd, Riyadh’s ability to control the cartel and global oil prices is waning.
Giorgio Cafiero, CEO and founder of Gulf State Analytics, and F. Gregory Gause, head of the Department of International Affairs at Texas A&M University, join host Jerry Feierstein to discuss the state of GCC relations amid the Qatar dispute and other crises heading into the next GCC Summit.
In this week’s Monday Briefing, MEI experts discuss recent and upcoming events including Russian air strikes in Aleppo, the elections in Bahrain, the growing international interest in Egypt’s offshore energy finds, and the appointment of a new Afghan team of negotiators for peace talks.
Although the Trump administration has said it will issue temporary waivers to some major importers of Iranian oil, further declines in Iran’s exports are likely after sanctions come into effect on Nov. 4.