Posted tagged ‘Oil war’

Russia and Iran Moving to Corner the Mideast Oil Supply

October 15, 2015

Russia and Iran Moving to Corner the Mideast Oil Supply, American ThinkerSteve Chambers, October 15, 2015

It looks like Vladimir Putin and the ayatollahs are preparing to corner the world’s oil supply – literally.

Last May I wrote on this site that Iran was in the process of surrounding the Saudi/Wahhabi oil reserves, along with those of the other Sunni Gulf petro-states.  I added that, “Iran’s strategy to strangle Saudi/Wahhabi oil production also dovetails with Putin’s interests.  As the ruler of the second largest exporter of oil, he would be delighted to see the Kingdom’s production eliminated or severely curtailed and global prices soar to unseen levels.  No wonder he is so overtly supporting Iran.”

We’ve now seen Putin take a major, menacing step in support of the Iranians by introducing combat forces into Syria.  Many analysts argue that he’s doing this both to protect his own naval base at Tartus and as some sort of favor to the Iranians.  Are those really sufficient inducement for him to spend scarce resources and risk Russian lives, or does he have bigger ambitions in mind?  Given the parlous state of Russia’s economy, thanks in very large part to the recent halving of oil prices, he must relish the opportunity now presented to him, in an axis with Iran, to drive those prices back to prior levels.

The Iranians, for their part, must welcome this opportunity as well, for two huge reasons: first, when sanctions are finally lifted, thanks to their friend in the White House, Iran’s oil production will only aggravate the current global excess oil supply, reducing their cash flow (although they will still repatriate the $150 billion released by the nuclear deal).  They and the Russians must both be desperate to find a way to prevent further oil price declines.  And second, Iran’s mortal sectarian enemies and rivals for leadership of all of Islam are the Saudi/Wahhabi clan, so the prospect of simultaneously hurting them while strengthening themselves must seem tremendously tantalizing.

To achieve this, the Russian-Iranian axis can pursue the encirclement strategy of the Arabian Peninsula that Iran has already been overtly conducting, as I described in May, and is evident by referring to the map below.

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Iran and its allies already control the border across the Saudi/Wahhabi Kingdom’s northern frontier, although the Iranian grip on the Syrian portion is tenuous – hence the Russian intervention.  Now Iran is also fighting a bitter proxy war with the Kingdom in Yemen, where Iran is backing coreligionist Shi’ites.  From Yemen, Iran can also threaten the Bab-al-Mandeb that provides access to the Red Sea, multiplying the pressure it already exerts on the Kingdom by threatening the Strait of Hormuz at the entrance to the Persian Gulf from its own territory.

Moreover, Iran is widely believed to be supporting the Shi’a who live on top of the Saudi/Wahhabi oil reserves in the Eastern Province.  The natural affinity between the Shi’a of Arabia and Iran has long worried the royal family and led them to discriminate against their Shi’ite subjects, fostering resentment among them.  Attacks on the Shi’a community early this year have increased tensions.  On top of all that, Iran is reportedly behind the recent Shi’a unrest in Bahrain, which Iran considers it lost “14th province” – much as Saddam viewed Kuwait in the late 1980s.

With this being the current state of the Mideast chessboard, consider how the game can unfold.  With Russian assistance, Iran can save its Syrian puppet and reinforce its defensive enclave in the Allawite homeland in the northwest of its putative boundaries.  Then the combined forces of the axis can turn on ISIS, all the while boasting of doing the world a favor, and reduce its territorial control if not extirpate it entirely.  Of course, the Saudi/Wahhabis will probably do whatever they can to assist their vicious ideological offspring, but it would be hard to bet against the axis.

As the axis pacifies Syria, it can then begin pressure the Saudi/Wahhabis and other Sunni petro-states to curtail their oil production enough both to accommodate the increased Iranian flow and to lift prices back to acceptable levels.  $100 a barrel must sound like a nice target.

The axis’s initial pressure will probably be diplomatic, applied by both principal powers.  However, with Iran’s foothold-by-proxy in Yemen and their influence in the Eastern Province and Bahrain, it could easily foment more general violence against the Saudi/Wahhabis, even within the Kingdom itself.  Iran could likewise twist Bahrain’s arm and thereby rattle the cages of the lesser Sunni petro-states.  Then, by trading a reduction in oil for a reduction in violence, the axis could achieve its objective.

If not, the Iranians could escalate the violence further.  Perhaps ideally from the Iranian perspective, the Saudi/Wahhabis would overreact and provide Iran with an excuse to strike directly at the geographically highly concentrated Arabian oil fields and support facilities.  Iran might not be willing to risk royal retaliation by attacking on its own, but it could be emboldened with Russian backing by air and sea, and perhaps even a nuclear umbrella.  In that scenario, the proud Arabs would be forced to bow to the will of their ancient Persian foes – particularly since it is obvious that the US under its current president could not be relied upon for support.

An attack on the Kingdom’s fields would cause a severe and lengthy disruption of Mideast oil supply, which would dreadful for the rest of the world – but certainly not the worst-case scenario.  Such a disruption would precipitate another nasty global recession and could severely weaken the US, Europe, and China, all of whose economies are fragile and probably brittle.  Thus the damage inflicted could far outlast the disruption itself.  This could be yet another highly attractive incentive for Putin and his ayatollah allies.

So, Putin and the ayatollahs have powerful motives to corner the world’s oil market and therefore the US and the rest of the world are facing an enormous risk.  The horrible pity of this is that the US could easily demonstrate the futility of the Russian-Iranian axis trying to take the world hostage with Mideast oil, simply by opening up our surface deposits of oil shales in the Rockies.  As I showed in this analysis last March, these resources could make Mideast oil irrelevant.

The US’ surface oil shales are completely different from the deep shales that are accessed through directional drilling and fracking and that grab all the headlines; the deep shales are a mere side show in terms of reserves.  The surface shales hold up to 3 trillion barrels of oil versus about 50 billion barrels of tight oil accessed by fracking.  The total global proven reserves of oil are 1.6 trillion barrels, and the Canadian tar sands have 1.6 to 2.5 trillion barrels (although they’re officially listed at 175 billion barrels, which are incorporated in the global total).  So, the US and Canada together essentially can triple the global supply of oil, and at prices in the $60-75/barrel range.  Meanwhile, Mideast reserves are about 800 billion barrels – half of Canada’s oil sands, perhaps less than a third of the US surface shales.  The world no longer needs the Muslim oil.

Unfortunately, the vast majority of the Rockies surface shales sit on Federal land, and while George W. Bush opened up those lands for development, Obama rescinded that policy.  These reserves now sit almost entirely idle.

As with any petroleum deposit, these surface shale reserves can’t be turned on with the wave of a wand.  But they can be opened for development with just a pen, and not even a phone.  For the protection of this country, and the good of the world, our current president should immediately open these reserves for development, with great fanfare.  If he will not use our military to protect our interests, he should at least use our economic weapons.

There is no time to lose.  Russia is on the march, in unison with the emboldened and enriched Iranians, thanks again to our president.  Putin and the ayatollahs know they will enjoy only another 464 days with this president and that none of his likely replacements will be so complacent and flexible, to use his own term.  We should therefore expect that they will want to make as much hay as they can while the sun reflects off of Obama’s insouciant grin.

 

Russia’s endgame in Syria: Follow the Money

October 7, 2015

Russia’s endgame in Syria: Follow the Money, Center for Security Policy, John Cordero, October 6, 2015

(Is Putin engaging in a holy war against the Islamic State, an oily war or both? — DM)

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The one strategic motivation for Russia that has been widely ignored is the economic one.  Qatar, the richest country in the world per capita and also owner of the world’s largest natural gas field, proposed in 2009 to jointly construct a gas pipeline running through Saudi Arabia, Jordan, Syria, Turkey, and into Europe.  Assad, not wanting to provoke Moscow, refused to sign on.  Instead, he floated an alternative: an Iran-Iraq-Syria and possibly Lebanon pipeline, to then follow under the Mediterranean to Europe. The Qatar-Turkey pipeline would run through majority Sunni countries with the exception of Syria’s Alawite regime. Assad’s counter proposal follows the Shia crescent.

Russia, not wanting to lose its primary market in Europe, is adamantly opposed to a prospective Qatari project.  A military presence in Syria will guarantee that even if Assad is removed from power, the pipeline will not be built.  It will look on favorably to the Iranian proposal, provided Gazprom and other state-owned companies get their share of the pie.

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As Vladimir Putin orders airstrikes against rebels of all stripes fighting Bashar al-Assad’s regime, there are important strategic economic goals behind Russia’s actions in Syria.  The short term goal is easy to discern: prevent Assad’s collapse as no alternative suitable to Russian interests exists, preserve Russia’s only naval base in the Middle East at Tartus, and promote Russia both at home and abroad as a world power that counterbalances American hegemony.

Much of the media has focused on Putin as a personal driver of Russian behavior.  While forays into Georgia and Ukraine have accomplished the tactical goals of preventing increased European Union presence in Russia’s sphere of influence, these have come at a high cost both politically and economically in the form of isolation and sanctions. Putin seems to have concluded that intervening in Syria in the name of fighting terrorism can only help repair Russia’s battered image.

It is important to at least try to understand Putin’s motivation without delving too much into psychoanalysis.  He is on record as lamenting the collapse of the Soviet Union as “the greatest geopolitical catastrophe of the 20th century.”  In power since 2000, the former KGB officer is an ardent Russian nationalist, a promoter of a personality cult concerned with his country’s standing and perception in the world.  With his career spent in the service of the state, he is not one to take a background role in world affairs. Putin has effectively used Russia’s alliance with Iran as an effective tool to undermine the US, both regionally in the Gulf and globally with the nuclear deal.

The current buildup at Tartus and Latakia is nothing new: since Hafez al-Assad’s rise to power in 1970, the Former Soviet Union and then Russia was and is a stalwart ally, long attempting to position Syria as a counterbalance to American and Israeli military superiority in the Middle East.

Russia’s actions are also a message to the world: unlike the US, which abandoned long-time ally Hosni Mubarak during his time of need in Egypt, Russia is prepared to intervene, militarily if necessary, to preserve a friendly regime in danger.  Therefore, it pays for autocrats to court Moscow, especially if they possess valuable resources or are in prime strategic locations.

While Vladimir Putin ostensibly espouses the acceptable goal of a global alliance against IS, the strategic context is that he has entered into a sectarian alliance with Shia Iran, Iraq, Syria, and the proxy army Hezbollah (The P4+1) against the American-backed Sunni alliance of Turkey, Saudi Arabia, Qatar, Jordan, and the UAE, all of whom insist that Assad has no future in Syria.

Through its airstrikes, Russia continues to advance the prior Syrian strategy of focusing efforts against pro-Western rebels, with the recognition that, while dangerous, the Islamic State is the one party in the conflict the West will never support.

The Islamic State will take advantage of both the respite, and the propaganda value of being the recognized number one enemy of the infidel coalition, which it uses to rally supporters simply by pointing out that its enemies are gathering to destroy the renewed Caliphate.

The one strategic motivation for Russia that has been widely ignored is the economic one.  Qatar, the richest country in the world per capita and also owner of the world’s largest natural gas field, proposed in 2009 to jointly construct a gas pipeline running through Saudi Arabia, Jordan, Syria, Turkey, and into Europe.  Assad, not wanting to provoke Moscow, refused to sign on.  Instead, he floated an alternative: an Iran-Iraq-Syria and possibly Lebanon pipeline, to then follow under the Mediterranean to Europe. The Qatar-Turkey pipeline would run through majority Sunni countries with the exception of Syria’s Alawite regime. Assad’s counter proposal follows the Shia crescent.

Russia, not wanting to lose its primary market in Europe, is adamantly opposed to a prospective Qatari project.  A military presence in Syria will guarantee that even if Assad is removed from power, the pipeline will not be built.  It will look on favorably to the Iranian proposal, provided Gazprom and other state-owned companies get their share of the pie.

Pipeline politics in the region have a long and varied history of Russian involvement.  The Baku-Tbilisi-Ceyhan oil pipeline was built only after Moscow’s demand for an alternative pipeline for Azeri oil to Russia was met.  During the 2008 Russia-Georgia war, US intelligence officials determined that an explosion on the pipeline near the Turkish-Georgian border was carried out via Russian government cyber warfare.  Days after the explosion, Russian fighter jets bombed positions in Georgia close to the pipeline. Although the BTC pipeline was built precisely to avoid Russian interference, the Kremlin has never let that stop them.

Turkey and Azerbaijan have also begun construction on a joint natural gas pipeline, theTANAP. This project’s stated goal is to reduce the EU’s dependence on Russian natural gas, a prospect that cannot please Moscow.   Both the BTC and TANAP bypass Armenia, a Russian ally and wary of its neighbors in the Caucasus.

As the endpoint for the Qatari project, Turkey is adamant in calling for Assad to step down or be removed, which dovetails with the proposed Sunni pipeline.  By clearing the way through Syria, Qatar and Saudi Arabia can receive a handsome return on their investment in backing jihadis fighting Assad.  On the other hand, Iran will not sit idly by and leave potential billions of dollars in the hands of its ideological and regional enemies.

Russian intervention in Syria is just beginning. There is every possibility that it will expand as more targets are found, perhaps those that are in the way of the proposed Iranian pipeline, directly threatening Damascus and by extension, the Russian monopoly of gas exports to Europe.  For the time being, Putin has the world’s attention.