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.
Although the current oil-market landscape might seem beneficial to the Gulf states, it will be difficult to sustain amid major drops in global oil supply, Washington’s standoff with Moscow and Tehran, and quota disagreements between Saudi Arabia and Russia.
Bearish and bullish factors are both at play in the global oil market, weighing on prices. The next big date on the calendar is November 4 — the point at which the 180-day wind-down period ends and U.S. sanctions on the Iranian energy sector are to be reinstated. Two days later, the U.S. midterm elections are due to take place.
Last week, major news outlets reported that China National Petroleum Corporation had acquired French oil and gas company Total’s share in the development of Iran’s South Pars gas field, citing an elusive article published by Iranian state news agency IRNA.
Even though energy production and exports are the lifeblood of all Arab states in the Gulf, the present crisis between Qatar on the one hand and Saudi Arabia, the United Arab Emirates, Bahrain, and Egypt on the other has had very little influence on the economics of oil and gas either internationally or within the region. However, the countries involved have a lot to gain from a resolution of the conflict, particularly if it leads to greater energy market integration.
In this week’s Monday Briefing, MEI experts Charles Lister, Alex Vatanka, Randa Slim, and Marvin G. Weinbaum provide analysis on the US’s silence amid the Assad regime’s expansion, the Iranian president’s trip to Europe, the uptick in violence after Iraq’s elections, and the upcoming Pakistani parliamentary elections.
The decline of the US’s role in Syria
Charles Lister, Senior Fellow
As international companies leave Iran under U.S. pressure, the Iranian government is scrambling to salvage as much foreign investment as possible. The top leadership in Tehran believes the solution is to engage with Russia, China, and the “east” to replace the West’s hesitant commitment to the Iranian market. But this eastward approach is a pipe dream, and there is plenty of history to prove it.
Iran’s Russian desires
Despite setbacks from the war against ISIS, Iraq remains the world’s fourth largest producer of oil, second only to Saudi Arabia among OPEC states. However, the administration of this vital natural resource has been plagued by corruption and disputes over how revenues should be allocated to promote equitable economic growth. The issue has drawn Iraq’s ethnic, sectarian, and political divisions to the surface.