As the result of developments in the Middle East, oil is back as a bargaining chip on the geopolitical chessboard.
Once Donald Trump lost the election for a second term as American president, it became increasingly evident that the new administration led by Joe Biden would attempt to revive the 2015 nuclear deal with Iran.
At the same time, the number of Houthi attacks on Saudi Arabia increased significantly. The logic behind these attacks seemed incomprehensible. With President Biden tightening the screws on Saudi Arabia, common thought held that the Houthis should take a back seat and let Biden’s diplomacy take its course, compelling Saudi Arabia to push back from Yemen.
That didn’t happen.
The attacks could have complicated things while Biden was at work on the Saudi-Yemen issue. Secretary of state Antony Blinken and others reiterated that the U.S. remains committed to the defence of Saudi Arabia.
Did Iran make a mistake getting involved?
With the Houthis regarded as an Iran proxy, it was clear the attacks couldn’t have happened without the tacit approval of the Iranians. But why?
It seems the Iranian leadership engineered the increased attacks with a purpose. Iran is in talks with the U.S. over reviving the nuclear deal, although there are still impediments. No one can predict if or when the deal will be revived, and when Iran will be allowed to sell its oil without sanctions.
And oil sales are crucial for Iran. It needs them urgently and absolutely. Although some observers say a deal between Iran and the U.S. is imminent, nothing can be said with certainty. It may take months or even years.
So Iran needed a Plan B.
Plan B is to sell oil through its arch-foe, Saudi Arabia. But to make the Saudis agree to such a proposition, Iran needed a real bargaining chip. The increasing number of missile and drone attacks by the Houthis on Saudi Arabia has emerged as that chip. Iran wants Saudi Arabia to sell Iranian oil and, in return, Iran says it will restrain the Houthis.
According to Middle East Eye, Iran has reportedly asked Saudi Arabia to help sell its oil and circumvent U.S. sanctions in exchange for limiting Houthi attacks on the kingdom’s oil facilities. The news organization quoted Iraqi officials familiar with negotiations that are taking place in Baghdad.
“They [the Iranians] offered to sell it to the Saudis at a price lower than international prices on the condition that the Saudis sell it on the world markets in their own way,” the Iraqi official told the Middle East Eye.
Iran relies mainly on the United Arab Emirates and Oman to sell its oil informally and needs another regional outlet to bypass the U.S.-imposed blockade. Saudi Arabia appears to be an ideal option for the Iranians, Iraqi officials reported.
And if the ongoing talks between the Saudis and Iranians succeed, it would also help Iran play a tougher hand at the bargaining table with the Americans over a nuclear deal in Vienna.
Once again, oil is playing a significant role in efforts to reach a regional détente. Oil and geopolitics continue to go hand in hand.
Toronto-based Rashid Husain Syed is a respected energy and political analyst. The Middle East is his area of focus. As well as writing for major local and global newspapers, Rashid is also a regular speaker at major international conferences. He has been asked to provide his perspective on global energy issues by both the Department of Energy in Washington and the International Energy Agency in Paris. For interview requests, click here.
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