If you are not intimately familiar with the Iran nuclear deal story and subsequent fallout, you can catch up by reading “Oil Supertankers Attacked by Iranian Proxies in the Strategic Bab al-Mandeb Strait,” published in Jul. 2018, and “A Sinking Feeling About Nuclear Persia,” published in Aug. 2018 with a Twitter thread chronology of events to present day.
Despite Iran President Hassan Rouhani’s defiant statements in the past that Iran would endure sanctions imposed by the West, even after a collapse of the 2015 Joint Comprehensive Plan of Action (JCPOA) nuclear deal, he admitted last Tuesday that plunging oil revenue has bankrupted the country.
Rouhani Admits Without Oil Exports The Government In Iran Is Broke… “Iran is experiencing one of its hardest years since the 1979 Islamic revolution… Without money, we cannot run the affairs of the state… Although we have some other incomes, the only revenue that can keep the country going is the oil money… We have never had so many problems in selling oil. We never had so many problems in keeping our oil tanker fleet sailing… How can we run the affairs of the country when we have problems with selling our oil?… Individuals who are not familiar with economics and budgeting say oil can be sold later, but they are mindless of the fact that it is not prudent to close the oil tap and deprive the country of its wealth.” – Radio Farda, Nov. 12
European concerns raise prospect of renewed U.N. sanctions on Iran… “marks a significant breakdown in diplomacy to try to save the 2015 nuclear deal and could presage its death knell, diplomats say. Britain, France and Germany have sought to salvage the pact, under which Iran undertook to curtail its uranium enrichment program in return for relief from sanctions crippling its economy, since the United States withdrew last year (May 2018)… The three European powers have failed to make good on the trade and investment dividends promised to Iran under the deal, as they have been unable to shield Tehran from renewed U.S. sanctions that have strangled its vital oil trade… The U.N. nuclear watchdog (IAEA) confirmed on Monday that Iran had resumed enriching uranium in its underground Fordow plant and was rapidly accelerating enrichment with a variety of advanced centrifuge machines also banned by the deal.” – Reuters, Nov. 12
Only two days prior to Rouhani’s admission, he touted the discovery of a new oil field, but that oil is not a game-changer and reeks of PR triage for public consumption.
Iran discovers new oil field with over 50 billion barrels… “The announcement by Hassan Rouhani comes as Iran faces crushing American sanctions after the U.S. pulled out of its nuclear deal with world powers last year. ‘I am telling the White House that in the days when you sanctioned the sale of Iranian oil and pressured our nation, the country’s dear workers and engineers were able to discover 53 billion barrels of oil in a big field’… The collapse of the nuclear deal coincided with a tense summer of mysterious attacks on oil tankers and Saudi oil facilities that the U.S. blamed on Iran. Tehran denied the allegation, though it did seize oil tankers and shoot down a U.S. military surveillance drone.” – AP, Nov. 19
The Truth Behind Iran’s “Massive” Oil Find… “The bold claim is less substantive and more for show to instill hope in Iranian citizens that are no doubt feeling the weight of the US sanctions as its influx of cash from its oil business shrinks… The oil find is of the very heavy variety, which is difficult to extract, even if Iran had the ability to tap the best drilling services and exploration and production companies in the world to develop it… However, Iran cannot do that on their own, and no one else is willing to touch Iran’s oil sector with a ten-foot pole, fearing they would be cut off from the U.S. financial system or slapped with secondary sanctions for dealing with Iran. This discovery or future discoveries are unlikely to change the dire conditions of Iran’s oil production and exports any time soon… The severely crippled oil exports are already effecting Iran’s government revenues, most of which come from oil sales.” – OilPrice.com, Nov. 14
The POTUS has been very firm with Iran but open to negotiations without any precondition to drop economic sanctions. The Iranian attack on Saudi Arabia’s Aramco oil fields in Sep. 2019 appears to have been the last straw at the White House. The POTUS has stated on numerous occasions that Iran’s economy is already a mess due to sanctions and “going to hell.”
Saudi Aramco Attacks… Saudi Gains, Iranian Losses… “First, Iran has attacked Saudi Arabia but found itself facing an international confrontation, not only with the state that it attacked. The aggression hit the artery of the global economy, not the Saudi economy, as Tehran imagined.” – Salman Al-Dossary, Oct. 3
“In early October, under American pressure, the state-owned China National Petroleum Corporation pulled out of a $5 billion deal to develop the South Pars gas field as had France’s Total S.A. As US sanctions ramp up, the International Monetary Fund estimates Iran’s GDP will continue to fall by 9.5% in 2019 while inflation will rise to 35.7%. Unemployment will keep increasing, from 12.1% in 2018, according to the World Bank, due to foreign sanctions coupled with domestic mismanagement. The Iranian government may authorize the Central Bank to devalue the rial. The United States has vastly more firepower ready to be deployed as well. Hence, compromising with Washington rather than repeatedly demanding the JCPOA be fulfilled is in the Islamic Republic’s self-interest.” – Yale University, Nov. 12
Economic pressure placed upon Iran appears to have blown a fuse over the weekend. Protests erupted across Iran on Saturday with the blocking of main roads and burning of tires while chanting “death to the dictator,” one day after the government announced the rationing of gas to 60 liters per month per vehicle from 260 liters and a 50% hike in the cost of fuel. Protests have erupted in at least 37 cities where many drivers deserted their vehicles and caused major traffic jams. In other areas, protesters torched banks, buses, and gas stations, attacked police kiosks, and confronted riot police. Shops in Tehran’s Grand Bazaar closed on Sunday when police locked down the area. The government has shut off or severely limited Internet access across the country to try to prevent the coordination of protests and posting of videos.
The higher price for fuel in Iran is still far below global market prices, but Iranians have become used to cheap fuel under the post-revolutionary regime that promised a welfare state with a wide variety of free or subsidized products and services. The sudden rise in fuel prices comes at a time when the public is already struggling financially due to harsh sanctions.
“One Iranian with close ties to the protesters told The Independent Iranians are genuinely frightened for their economic well-being. He said: ‘People are pissed off and scared to death of another wave of inflation which will inevitably happen after rising fuel prices’… Recent visitors to Iran say anger among Iranians at the Tehran establishment has reached fever pitch during a period of global unrest against elites across the Middle East, with protests against powerful ruling cliques in neighboring Iraq, as well as in Lebanon. Both are Shia-dominated countries with political and religious ties to Tehran. ‘People are furious…There is the general hate towards the regime and people who would use every opportunity to jump on the bandwagon and express their general dissatisfaction but this is mostly economic for the moment.’” – Independent
- ‘Death to the dictator’: Iran protests intensify after petrol price hike – Al Arabiya
- ran’s Khamenei backs gasoline price hike, blames ‘sabotage’ for unrest – Reuters
- Iran Rocked by Protests as Images of Khamenei Set on Fire and Banks Burned – Harretz
- Iranian protesters set fire to the Central Bank in Behbahan – The Portal
Protesters Set Fire to Iran Central Bank…
Flashback: The Best of Baghdad Bob…
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