Iran Nuclear Negotiations by Entessar Nader;Afrasiabi Kaveh L.;

Author:Entessar, Nader;Afrasiabi, Kaveh L.;
Language: eng
Format: epub
Tags: undefined
Publisher: Rowman & Littlefield Unlimited Model
Published: 2012-08-15T00:00:00+00:00

The Implications of the Saudi “Oil Card”

Throughout the summer and fall of 2014, when the Iran nuclear talks were progressing in earnest, there was a steep decline in oil prices that hit the struggling Iranian economy. Between June and November, to their horror, Iranians watched a $40 a barrel decline in the oil price, with the prospect of further decline as a result of the oversupply of oil and OPEC’s refusal to curtail production. With the Iranian budget set on the basis of oil prices at $85 a barrel, the sharp decrease in the price of oil was by accounts an ominous development that added to the government’s economic woes.[52] The Rouhani government had to reevaluate its budgetary forecasts and priorities and take into consideration the probability of sustained sanctions in the absence of a nuclear deal that would, in turn, frustrate Iran’s plans to increase its OPEC market share by “doubling the exports as soon as the sanctions are over,” to paraphrase Iran’s oil minister Bijan Namdar Zanganeh.[53]

But, as the November deadline for a final nuclear deal passed without any breakthroughs, save an agreement to extend the interim deal for another seven months, Tehran’s hope to see the removal of energy sanctions on Iran was temporarily overshadowed by the stark realization that the other side was in no hurry to accommodate Iran’s quest for a speedy post-sanctions economic recovery. On the contrary, the West was willing to inflict heavier prices for Iran’s defiant posture at the nuclear negotiation table.[54] Naturally, Iran’s Supreme Leader interpreted this as a sign that the United States and “other colonial Western powers” were intent on “bringing Iran to its knees” instead of seeking an honorable agreement.[55] Ayatollah Khamenei praised the negotiating team for its “heroic resistance” against such pressures that he vowed would never succeed. Simultaneously, a growing number of commentators, both in Iran and the West, pointed at Saudi Arabia and the possibility of a subtle use of the “oil card” by both the United States and the Saudis as leverage vis-à-vis an economically weakened Iran.[56] It has been noted that with “oil prices falling, the immediate economic incentive of getting Iranian barrels smoothly back to the world market is diminished, analysts say, allowing Western powers more leeway to drive a harder deal.”[57]

It must be noted that not everyone subscribed to the “oil card” argument, and some Iranian analysts either dismissed it as a “conspiracy theory” or relegated it to a secondary factor by attributing the declining oil prices first and foremost to the declining oil demands in the global market and the increases in oil production in the United States, Libya, and Iraq.[58] In addition, there was the Saudi competition with the United States over shale oil. According to one Iranian commentator, it was “also likely that Saudi Arabia may allow lower prices to continue, in part to squeeze its main rivals—Iran and Russia—and in part to put pressure on shale oil producers in the United States, whose higher production costs make it harder for them to compete when prices are lower abroad.

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