A moment of monumental importance for U.S.-Iran relations took place early last week when a high-level exchange of prisoners took place in Switzerland. OilPrice.com can exclusively reveal that during the exchange the U.S., for the first time, made it clear that it would resume negotiations with Iran on the removal of sanctions “with no preconditions.” Iran made it equally clear that it saw the prisoner exchange as the road to re-engaging in the Joint Comprehensive Plan of Action (JCPOA) nuclear deal, without the removal of sanctions by the U.S. being required beforehand. “This is the beginning of the end of this extremely dangerous global stand-off between the U.S. and Iran,” a senior oil and gas industry source who works closely with Iran’s Petroleum Ministry exclusively told OilPrice.com last week.
Where we are now in U.S.-Iran relations is a product of two key factors that have occurred in just over the past six months. The first of these was the absolute absence of any support for any meaningful U.S. retaliation against Iran for either the downing of the U.S. surveillance drone in June, or the attacks on Saudi Arabia’s Khurais oil field and the Abqaiq refinery in September. In the case of the former, military retaliation was halted at the last moment, and subsequently John Bolton – the most insistent proponent of military action against Iran over the years – was fired as National Security Adviser. In the case of the latter, various high-level officials from the U.S. State Department repeatedly tried to persuade U.S. allies in NATO and other supposedly sympathetic states in the Middle East to take part in a joint naval task force to patrol the Strait of Hormuz, but to no avail.
However, the geopolitical scene and the dynamics of conflict between Iran and the United States have undergone huge transformation since then. A few facts have emerged on the ground.
The first is that the intrusive US sanctions against Iran’s crude oil exports have failed miserably with Iran continuing to sell its crude oil to its main buyers, namely China, India, the EU, Turkey and score of other countries in defiance of the US.
The second fact is that by shooting a US surveillance drone in June, Iran has shown its military capability and military sophistication.
The third fact is that despite the devastating attacks on Saudi oil infrastructure by Iran’s allies, the Houthis, the United States had no appetite to attack Iran. The United States came to the conclusion that any retaliation against Iran even a symbolic one will mean war and this will mean in broader terms the end of US national interests in the whole Middle East, the risk that thousands of US troops in Iraq and in Deir ez-Zur in Syria could be taken hostages or killed. In addition, US naval assets including Aircraft Carries and US military basis including the huge al-Udeid base in Qatar could be within range of Iranian missiles.
The fourth fact is that the Saudi oil industry has become hostage to attacks by the Houthis. The Houthis could in the future and at will target the Saudi Ras Tannura oil-loading terminal, the world’s largest and cripple Saudi oil exports thus plunging the world in a global oil crisis.
The fifth fact is that Iran strategically dominates the Middle East through its allies in Syria, the Hashd al-Shaabi (Popular Mobilization Units) in Iraq, the Houthis in Yemen, Hizbullah in Lebanon and Hamas in Palestine.
The sixth fact is that Iran has won the Middle East war without even firing a shot in anger. It controls the Strait of Hormuz and is capable of blocking it at well. As a result, Iran can take the global economy as hostage by pushing oil prices to $140 a barrel and precipitating a global oil crisis.
The seventh fact is that the new international coalition for maritime security in the Gulf region has never taken off because the United States is globally perceived as the source of trouble in the Gulf region and also because there is growing disenchantment of the US in the Middle East. That is why the overwhelming majority of countries approached by the United States to join the maritime coalition have declined the invitation.
The eight fact is that the strategic alliance between China and Russia is on the rise and both countries will rush to fill any vacuum left by a withdrawal of the United States from the Middle East. The Arab Gulf countries are aware of this imperceptible shift in the global balance of power
The firing of John Bolton and the reality that Saudi Arabia is no match to Iran in any military confrontation and the fact that Israel wouldn’t dare attack Iran without US involvement plus the above mentioned facts have convinced Iran that the US is capitulating and will be soon withdrawing from the greater Middle East leaving the whole region under its influence.
The exchange of prisoners is being used by the United States as a fig leaf or a face-saving format to start negotiations with Iran. However, Iran will never accept any negotiations without a lifting of US sanctions against it first.
Dr Mamdouh G Salameh
International Oil Economist
Visiting Professor of Energy Economics at ESCP Europe Business School, London