I just watched Talk to Al Jazeera’s latest, an interview of Iranian Oil Minister Rostam Qasemi by Teymoor Nabili. I hadn’t seen more than photographs and brief quotes from Qasemi before, so it was quite interesting to see him speaking at length. Watch a few minutes of the interview, get a feel for the man–is it just me, or is he a bit slow? It takes about ten minutes for him to say anything that, in translation at least, doesn’t sound like one of his assistants bullet-pointed a Wikipedia article on the international oil market, and the entire time his eyes are half-closed as he speaks in a monotone. (One wonders whether he’s gotten into Iran’s ample supply of opium.) Most of his answers seem to be little more than a statement of the most basic and uncontroversial facts about whatever is being discussed. His reply to a question on whether OPEC would cut production quotas now that Libyan production is coming back online provides a sample of the trivialities that dribble from his ample jowls:
Tag Archives: oil
The impasse over India’s growing debt to Iran has taken a new turn. India has been unable to pay Iran for oil imports due to international sanctions on Iran, leading to an Iranian threat to cut off its supplies to India. The threat was so vaguely worded that it seemed like a bluff. Saudi Arabia has now called that bluff, offering to boost its oil production and send its oil to India to balance any Iranian cutoff. It’s consistent with Saudi Arabia’s history of attempting to stabilize world oil markets–and that’s how they’re justifying it. However, it’s also consistent with the Kingdom’s attempts to isolate and weaken Iran due to the growing threat it poses. It’s doubtful that the Iranian cutoff will actually go through, but this move by the Saudis weakens their hand in negotiations with the Indians. Iran may now be forced to accept payment in rupees–a currency it has little use for–or to continue allowing India to run up debt. Each would further weaken Iran’s economy, making it harder to develop fancy new toys for the military, pay wages to the bloated public sector, and keep the people quiet.
There’s an interesting detail to this. The Saudis offered to replace “some,” not all, of the 400,000 barrels Iran supplies to India. This gives credence to the rumor that the Saudis don’t really have significant excess oil production capacity, or at least not excess capacity that can be brought online on short notice. That excess capacity is the global oil economy’s insurance policy–it minimized the impact, for instance, of the loss of Libya’s significant oil production due to the revolution. If people begin to lose faith in the Saudi excess capacity idea, oil prices could see a small but permanent increase.
Saudi Arabia’s state expenditures for this year are an impressive 41% over the original budget. The Saudis have been spending money as only the Saudis (and Americans) can–buying weapons, giving mass foreign aid grants, and shoveling money into their population. Despite this, the state will run a surplus of nearly $100 billion dollars. It’s all a paradoxical consequence of the Arab Spring. The Saudis had been very pessimistically budgeting for $60 a barrel oil (a price unseen for regional index Dubai Crude since mid-2009), even though it was at $90 a barrel at the beginning of the year. Then the uprisings happened, investors got nervous, Libya stopped producing and the market tightened up. Oil hit $120 at the end of April. The Saudis are suddenly flush with money and more able than ever to push counterrevolution and stabilization wherever they please. That’s the paradox: the more unstable the Middle East becomes, the more regimes there are able to fight instability.
AFP is reporting that Iran’s state oil company, NIOC, is threatening to stopper its flows of crude oil to India if India doesn’t start paying its debts. India consumes heavily from Iran–it imports 400,000 barrels per day, or about an eighth of its oil. However, sanctions have made it harder and harder for India to transfer payments for that oil, meaning they’re now billions of dollars behind, which is making the cash-strapped Islamic Republic antsy.
This will be an extremely interesting story to follow, as it might give insights into broader questions about India’s role as an emerging power. Since the end of the Cold War, India has been inching closer to the United States. However, India is also a rapidly growing country that must find fuel for its economy–I don’t have the figures, but the three million barrels of oil being consumed by India today are only the beginning. Oil markets will tighten up in the future, meaning India needs to build “special relationships” with suppliers now, lest it be left in the cold in the future. Iran is an excellent candidate supplier, and India’s been courting Iran fairly heavily. They’re helping develop a major port (with all sorts of rumors of related security deals) in Sistan and Baluchestan’s city of Chahbahar, and there was even talk of building an Iran-Pakistan-India pipeline. However, oil is just one of India’s concerns, and that relationship with the US is important as India tries to ensure it doesn’t become, as it were, the Mexico to China’s United States. Iran’s threat, as you can see in the article I linked to, is ambiguous–the spokesman warned India of potential shutdown and then said there were no plans to actually shut down. However, Iran certainly would like those two billion dollars back. If India can’t find a legal way to get that money to Iran–and Iran refuses to take rupees–then India may be forced to choose between violating sanctions and violating its contracts with Iran. The direction it chooses, should such a scenario arise, will show us how the Singh government balances its fundamental interests.
Fellow Government in the Lab contributor Michael Omer-Man, an American writer based out of Jaffa, Israel, wrote an excellent analysis of US President Barack Obama’s latest Middle East policy speech. As Omer-Man points out, all sides are “over-reacting” to Obama’s assertion that the 1967 borders should be the basis for a final settlement. The Middle East Quartet, for instance, has already expressed “strong support” for Obama’s remarks, for his remarks were consistent with decades of American policy, and the policies of most other aspirant brokers. Netanyahu’s reaction has been overplayed in the media, and was likely nothing more than an attempt to show off to his fragile and hawkish domestic coalition while riling up Israel’s friends in the American political sphere. Netanyahu was certainly not surprised by the content of Obama’s remarks, since they reflected a known US position. What’s more, Obama’s refusal to extend support to the Palestinian statehood bid–which he referred to as “symbolic actions to isolate Israel”–would have gone over quite well in Tel Aviv, as would his line about “efforts to delegitimize Israel,” which might as well have been penned by Avigdor Lieberman himself (well, in a good mood). The media storm will blow over quickly, and the diplomatic storm was likely more of a drizzle.
The 2008 elections saw a GOP ticket that emphasized its “maverick” status–a willingness to defy the party line. Donald Trump’s 2012 campaign seems to be taking maverick one step further–to loose cannon. He has been making many foreign policy statements of late, each seemingly more, ahem, out of the mainstream than the last. His latest remarks, on the relationships between the US and Saudi Arabia, are not merely ridiculous–they are dangerous. Continue reading