Iran’s Oil Weapon: Fielded and Wielded
By Steve Schippert
Iranian Supreme Leader Ayatollah Khamenei threatened to disrupt Gulf oil shipments if America should “make the slightest mistake regarding Iran.” This disruption, repeatedly touted in the past by threatening to block the Strait of Hormuz by sinking tankers, is not the 'oil weapon' that should be immediately considered, though the blockage is a very real and plausible scenario.
While the White House has dubbed Iran's threat to disrupt oil supplies "theoretical", Iran’s Oil Weapon is not one of potential use by supply disruption. Iran has already fielded its Oil Weapon and wields it on a regular basis through manipulating the rate of its primary source of income through threatening rhetoric from Khamenei, Ahmadinejad and others within the regime’s political and military leadership.
Immediately after Ayatollah Khamenei’s open threat, crude prices spiked and US stocks dipped amid energy fears directly attributable to the public fire-breathing of Iran’s Supreme Leader and Spiritual Guide. Indeed, the crowds gathered for his speech chanted “Death to America!” at multiple points throughout. World oil markets seemed to chant “Oh no, what will we do?” What they – and the world’s consumers – will do is pay more for their reaction.
This is not necessarily to fault them for reacting to a threat that should be taken quite seriously. Nor is it a blind attempt to dismiss the myriad other factors in determining market price beyond Iran’s sphere of influence, such as rising demand, production disruptions in Nigeria and other factors. It is, rather, a seemingly rare simple acknowledgement of an Iranian threat already realized.
Some countries, such as Japan and South Korea, have curtailed oil imports from Iran over the past quarter in large part fearing a potential disruption by either Iranian design as threatened or US military action. It should be noted that Iran’s oil exports have not decreased as a result, as China has eagerly absorbed every barrel of slack.
Consider that after China voted to send Iran to the Security Council as part of a 27-3 IAEA vote in February 2006, Iran vowed to complete a pipeline to Pakistan even if India, who also voted against Iran, dropped out.
China has already spent $200 million in Pakistan to start construction on a new port to facilitate energy shipments and President Pervez Musharraf said that Pakistan is “interested in setting up a trade and energy corridor for China.”
With veto power within the Security Council and the heavy influence that comes with it, an increasingly oil-hungry China sits poised to establish lucrative and secure long-term oil and natural gas supplies from Iran. These long-term supply agreements could be potentially immune from major market fluctuations resulting from international tensions over the Iranian nuclear crisis and inflaming rhetoric emanating from the Iranian leadership that keeps Iran’s per-barrel primary income at unprecedented windfall levels while simultaneously inflicting damage to the American economy.
China and Russia, opposed to both sanctions and military action against Iran over its nuclear weapons program, admitted Iran as a partner in the Shanghai Cooperation Organization, further illustrating what appears to be China’s partnership with Iran. Secretary of Defense Donald Rumsfeld spelled the illogic of Iran’s inclusion into the SCO when he said, “It strikes me as passing strange that one would want to bring into an organization that says it is against terrorism one of the leading terrorist nations in the world: Iran.”
According to the New York Times report, Prime Minister Lee Hsien Loong of Singapore asserted that “Iran’s role in the Shanghai organization was a way for Russia and China to demonstrate their influence.” Said the prime minister, “Russia and China have reminded the West of their combined influence on world-turning events.” Their chosen manner of “assertion of influence” should be noted, choosing to include the world’s chief state sponsor of terrorism in a security organization ‘opposed to terrorism’ rather than support any punitive actions against them for their intransigence on the nuclear issue and use of proliferation networks for the acquisition of nuclear equipment and technology.
It appears that the Sino-Russo influence has afforded this non-consequential stance to dictate the offer made to Iran which was hand-delivered by Javier Solana on Monday. According to Russian Foreign Minister Lavrov, the offer included assurances that no military intervention will be allowed. With Russia and China consistently and adamantly opposed to sanctions as well, Iran now has apparent safe haven, free of consequence unless the US devises sanctions outside the UN body.
All the while, Iran proceeds at breakneck pace in their nuclear efforts in an immensely expensive project fed nearly exclusively by the windfall oil proceeds. Proceeds manipulated in no accident and in no small part by the mullah regime's ratcheting rhetoric.
So when Ayatollah Khamenei declares that Iran in a far better position than the US, he is quite correct, regardless of American polls.
The Oil Weapon is without doubt already fielded and expertly wielded, both a convenient boon for the Godless Chinese dictatorship and an economic bane for the Great Satan.