Posts Tagged ‘Iranian Oil Exports’

China comes to the rescue of Iran

September 9, 2019

The Chinese and Iranian governments have announced that China will invest $400 billion to develop the Iranian oil and gas industry, a petroleum industry newsletter has reported.

The Iranian government has embraced the Chinese Belt and Road Initiative, also known as the New Silk Road, an ambitious plan to build infrastructure to unify the economy of the interior of Eurasia under Chinese leadership.

It will include $120 billion for new oil and gas pipeline, including a pipeline through Turkey in violation of U.S. sanctions.  All the equipment for the new projects will be provided by Chinese contractors.

China has the right to buy Iranian oil at a discount and pay for it in soft currencies it has accumulated in dealings with countries in Africa and Asia.  This amounts to an overall 30 percent discount from the world price.

China will employ 5,000 “security personnel” to guard its properties.  This means that any attack on Iran would involve risk of killing Chinese and inviting Chinese retaliation.

Presumably the Iranians, like the Russians, would prefer to sell to Europe, their natural market, for full price, but the U.S. government has blocked them from doing business in Europe in dollars.

The goal of U.S. foreign policy for 70 years has been to control the oil of the Middle East.  Now the oil of Iran is within the Chinese sphere of influence.

There is little intrinsic common ground between China, Iran and Russia.  The U.S. government has driven them together by waging economic warfare against all three.  In the process, it is antagonizing its allies in Europe by forcing them to act against their economic interests.

China’s foreign policy makes it economically stronger.  United States foreign policy is a drain on U.S. strength.  China is making friends.  The U.S. is making enemies.  This will end better for China than it will for the United States.

LINKS

China Defies Trump Big Time With $400 Billion Belt and Road Investment, 5,000 Security Personnel by Juan Cole for Informed Comment.  Hat tip to peteybee.

China and Iran flesh out strategic partnership by Simon Watkins for Petroleum Economist.

How Tehran Fits into Russia-China Strategy by Pepe Escobar for Asia Times.

Risky business in the Persian Gulf

January 19, 2012

The Obama administration is drifting toward war with Iran.  Besides the obvious risk of a repeat of the U.S. invasion of Iraq, there are risks of another oil price shock and of confrontation with China.

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Iran is the world’s third-largest oil exporter, behind Saudi Arabia and Russia.  The United States government is trying to organize a world oil embargo against Iran.  Saudi Arabia’s rulers promise to increase their own oil production to make up for Iranian oil being taken off the world market.  Iran’s rulers threaten that if that happens, Iranian forces will close the Strait of Hormuz, through which 20 percent of the world’s oil exports go.

The United States gets most of its oil from domestic production and other Western Hemisphere sources, but the nations of Asia depend on Middle East oil.  The Chinese expect to more than double their consumption of oil within the next 10 years.  The Chinese government has tried to befriend Iran while getting along with the United States.  But if China’s oil supply is jeopardized, there could be a serious confrontation.  Since the United States and China are the world’s two largest oil importers, there could be a confrontation anyway, as oil becomes harder to find and more expensive to produce.

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Nima Khorrami Assi, a security analyst at the Transnational Crisis Project in London, wrote recently that, until now, China and also India have sought to acquire oil supplies through a policy of neutrality, nonintervention and cooperation with all governments.  But he said that the two countries are adopting different policies over the U.S.-Iran confrontation.

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India aligns with the United States, Japan and the Arab kingdoms in the Gulf Cooperation Council, which so many Indians work overseas and which are potential customers for India’s information technology products.  But China, in his view, is joining Russia as a protector of Iran, splitting the world’s major powers into two competing blocs.  I can’t say whether is true, or whether there is any truth in reports that China is supplying Iran with advanced military technology.  But these are things that could be true, or could be true in the future if they aren’t happening now.

A writer for Forbes asserted that if the Strait of Hormuz is closed, even temporarily, world oil prices could triple.  That’s the last thing the United States or the European Union nations need, as they struggle to pull out of the deepest recession since the 1930s.

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But it might not come to that.  Pepe Escobar, roving correspondent for the Asia Times of Singapore, noted that Pakistan has given the go-ahead to a new pipeline which will bring Iranian natural gas to the Indian subcontinent, bypassing any naval blockage..  He noted that Iran has excellent relations not only with China and Russia, but also Iraq, Afghanistan, Pakistan, not to mention Venezuela, Ecuador, Bolivia and other nations of the non-aligned movement.

The great danger, as he sees it, is escalation of the low-intensity war that the United States is waging against Iran into a major military conflict.  The United States is losing economic power, but it still has military power.  The temptation will be to try to leverage military power into economic power.

Click on China and India: Rival Middle East Strategies for Nima Khorrami Assi’s article for Al Jazeera English.

Click on The myth of an isolated Iran for Pepe Escobar’s article for the Asia Times of Hong KongSingapore, reprinted by Salon.

Click on Iran’s Real Weapon of Mass Destruction Is Oil Prices for Daniel Fisher’s article in Forbes.

Click on Pakistan speeds pursuit of Iranian pipeline, defying U.S. for a report in McClatchy Newspapers.