Oil and Uranium: Instability and Insecurity in the Persian Gulf
The Persian Gulf, as a valuable oil shipping route, has been a longstanding geopolitical fault line and the primary site of a power struggle between Iran, the United States, and US allies in the Gulf Cooperation Council (GCC) such as Saudi Arabia and the United Arab Emirates (UAE). The US-Iran relationship has long been characterised by suspicion and hostility since the seizure of the US embassy in Tehran by anti-American militants in 1979. The election of the moderate Hassan Rouhani to Iran’s presidency in 2013 and the 2015 nuclear deal led to a brief thaw in the troubled relationship between Iran and the West, helping open up trade and diplomatic channels. However, the Trump administration’s “maximum pressure approach” has led to further deterioration in US-Iran relations after the US withdrew from the nuclear agreement and reintroduced economic sanctions last year. Recent events, including a missile attack on a Saudi power station by Iranian-backed Houthi rebels, the bombing of oil tankers in the Gulf of Oman and the shooting down of a US military drone by the Iranian Revolutionary Guard Corps (IRGC) have drastically undermined stability in the region and threaten to bring the US, Iran and their respective allies ever closer to open conflict.
On the 13th of June, explosives attacks struck two oil tankers, the Norwegian-owned Front Altair and the Japanese-owned Kokuka Courageous, as they sailed through the Strait of Hormuz and entered the Gulf of Oman. Both ships had their crews safely evacuated and were towed to ports in the UAE for further inspection. US Secretary of State Mike Pompeo was quick to blame Iran for the attacks, arguing that only Iran has the capability and motivation to carry out such an attack, having previously made threats to disrupt global energy supplies by cutting off access to the Strait of Hormuz, a vital chokepoint through which approximately a fifth of the world’s oil passes. Later, the Pentagon released photosthat it claims shows the crew of an Iranian Revolutionary Guard Corps (IRGC) boat removing an unexploded mine from the hull of the Kokuka Courageous after the evacuation of its crew.
Iranian officials have rejected any claims of involvement in the attacks and implied they may have been false-flag attacks in order to justify greater US military involvement in the region. Major General Mohammed Baqeri, Chief of Staff of the Iranian Armed Forces, was quoted by Fars News Agency as saying that if Iran were to decide to block the Strait of Hormuz, it has the capacity to do so “fully and publically”. Iran’s foreign minister Mohammad Javad Zarif called the timing of the attacks “suspicious”, given that the attackers struck a Japanese-owned ship while Japanese Prime Minister Shinzo Abe was visiting Tehran in an attempt to smooth US-Iranian tensions.
US-Iranian tensions escalated further on the 20th of June after the IRGC announced it had shot down a military surveillance drone for allegedly violating Iranian airspace near the Strait of Hormuz. Appearing on Iranian state television, IRGC commander-in-chief Major General Hossein Salami delivered a speech warning the US that Iran’s borders were a “red line” and that any enemy violating the borders would be “annihilated”. Washington confirmed that one of its drones had been shot down but disputed the Iranian narrative, claiming that the drone was operating in international airspace and had not crossed into Iranian territory. US Central Command described the incident as an “unprovoked attack” and “an attempt to disrupt our ability to monitor the area following recent threats to international shipping”.
The drone was identified as an RQ-4 Global Hawk, which comes with a price tag of approximately US$150 million, can fly at an altitude of almost 20 kilometres and can scan an area the size of Greece in 24 hours. At the time of writing, no independent verification of the drone’s location at the time it was hit had emerged. However, Justin Bronk, a research fellow at the Royal United Services Institute, a security studies think tank, said that because of the technological sophistication of the drone’s guidance system it is highly unlikely that the drone entered Iranian territory by mistake. Bronk argues that either the drone was shot down in international airspace by Iran as a controlled escalation or warning to the US, or the drone was shot down after deliberately straying into Iranian airspace, a less likely option given the prohibitively expensive cost of the drone.
Regardless of who is at fault, both incidents have dramatically increased insecurity in the region. Oil prices jumped on Thursday after news of the tanker attacks stoked fears of a disruption to the global oil supply and several maritime insurance firms raised insurance prices for cargo ships passing through the Persian Gulf. In response to the downing of the US drone, the US Federal Aviation Authority (FAA) issued an emergency order forbidding US airlines from flying over the Persian Gulf and the Gulf of Oman. Several non-US airlines, including British Airways, Lufthansa and Singapore Airlines have also announced they will follow the FAA’s guidance and re-route flights to avoid Iranian airspace.
These incidents take place against a backdrop of suspicion and hostility that has been escalating since the US withdrew from the 2015 Iranian nuclear deal last year. In 2015, Iran agreed to a long term deal, formally known as the Joint Comprehensive Plan of Action (JCPOA), with the US, UK, France, Russia, China and Germany whereby it would agree to restrictions on its controversial nuclear program in exchange for the lifting of economic sanctions. While the Obama administration regarded the deal as a foreign policy success, Trump has long been critical of the deal. During his presidential campaign in 2016 he repeatedly attacked the deal for not doing enough to keep Iran from developing ballistic missile capabilities or preventing it from funding terrorist groups in the region, saying in a speech to the American Israel Public Affairs Committee (AIPAC), a pro-Israel lobbying group, that dismantling the deal was his “number one priority”. In May last year, Trump announced the US would unilaterally withdraw from the “decaying and rotten” deal and reimpose the sanctions that the JCPOA lifted. In November, sanctions targeting Iran’s oil and financial sectors took effect, triggering an economic crisis and rising inflation. Trump also announced the reintroduction of secondary sanctions for countries that continued to buy Iranian oil in an attempt to cut Iranian oil revenues to zero and bring Iran back to the negotiating table. However, Iran is adamant that the deal cannot be renegotiated.
In response to this, Iran announced it would be scaling back its commitments under the nuclear deal and resuming its uranium enrichment activities. In an ultimatum to the remaining signatories to the JCPOA, Iran demanded that those still committed to the deal take steps to protect Iran from the economically devastating effects of the sanctions or else Iran would soon exceed the limitations on enriched uranium imposed by the deal. Despite expressing “regret” at the US withdrawal and remaining committed to the deal, the European JCPOA signatories, Germany, France, the UK and the EU, have announced they reject any ultimatum and instead said they will wait for an independent assessment as to whether or not Iran had been meeting its obligations under the 2015 deal. However, officials have warned that European countries have only limited capacity to agree with Iran’s request; they cannot force companies to trade with Iran and risk reprisals from US authorities.
New sanctions were applied by the White House on Monday, targeting assets held by Supreme Leader Ayatollah Ali Khamenei and his close associates in an attempt to deprive the senior Iranian leadership of funds. However, a spokesperson for the Iranian foreign minister warned that these new sanctions would serve to permanently close the path to diplomacy. President Rouhani warned that these sanctions would have little effect as the Ayatolla has no assets abroad, and described the actions of the White House as “mentally retarded”and a sign of desperation.
Despite the aggressive posturing and hostile rhetoric on both sides, the threat of open conflict has led both sides to adopt a more cautious approach and avoid actions that could lead to a loss of life. Although US President Donald Trump tweeted that Iran had made “a very big mistake” in shooting down the drone and warned that it would face “obliteration” if open conflict broke out, he did not rule out the possibility of human error, telling reporters that he did not believe it was intentional and may have been an error made by a “loose and stupid” Iranian general. The following day, he announced that although he had initially approved retaliatory strikes on Iranian territory by the US Navy and Air Force, he later decided that the strikes, which a General estimated would cause 150 Iranian casualties, were not a proportionate response and ordered US forces to stand down and instead authorised a cyber-attack on Iranian radar and missile defence systems.
Ultimately, both sides wish to avoid military conflict. It is especially important that Trump, facing reelection in 2020, avoids involving US forces in just the kind of drawn-out Middle Eastern conflict that he has criticised his predecessors for. Instead, Trump hopes to bring Iran to the negotiating table through a campaign of ‘maximum pressure’ through economic sanctions. The considerable economic impact of the sanctions on Iran has also put pressure on Rouhani’s administration to find a resolution to the crisis. However, the neoconservative in Trump’s administration, most notably National Security Advisor John Bolton, are increasingly advocating military action on Iran, a path of action that could have disastrous consequences for the region. Iran has also repeatedly emphasised its refusal to bow to American economic pressure. Rather, the strangling of its economy through sanctions on the oil industry threatens to push it to take increasingly extreme retaliatory measures. Although Iran does not have the capacity to directly strike the US, the US Gulf Arab states on the front line will bear the brunt of any Iranian military response. Open conflict in the Persian Gulf would also have disastrous consequences for global energy supplies due to the importance of the region as a shipping route for petroleum products.