Photo: iStock

After the US-led invasion of Iraq in 2003, Iran and its regional allies emerged once more as the key threat perceived by America. But the question remains why the US should be so concerned about a third-rate power in a region seemingly less central to American interests today. The answer lies in oil – but not in the way this is conventionally understood. Washington isn’t “protecting” supplies of energy for its industries; instead, its interest lies in its ability to control oil prices and supply as an instrument of foreign policy.

Studies suggest that the US spends $81 billion annually to protect oil supplies, mostly in the Persian Gulf. Yet even in 2005, around the peak of American oil imports, the share of the Middle East was not large: 14% from Saudi Arabia, 5% from Iraq and less than 2% from Kuwait. Since then, net US oil imports have been virtually eliminated by the shale boom.

Of course, as long as US oil markets continue to be connected to the world, the country will still see the impact of any shortfall. A disruption in the Middle East would drive up international prices, helping oil-producing Republican states such as Texas, Oklahoma, North Dakota and Alaska, but hurting Midwestern motorists in swing stakes that were the key to President Donald Trump’s narrow win in 2016.

Today, in terms of oil as policy, disruptions at major international oil producers have turned the spotlight back to American allies in the Gulf region.

Venezuela’s output, 2.4 million barrels per day (mbpd) as recently as 2015, has plummeted to 830,000bpd. After severe mismanagement and underinvestment, various US sanctions have pushed its industry toward collapse. The US-backed “interim president,” Juan Guiadó, has failed to gain much traction, with Russia doubling down on its backing of sitting President Nicolás Maduro.

In April, Trump supported the move of Libyan Field Marshal Khalifa Haftar toward Tripoli. The chairman of Libya’s national oil company says 95% of oil output could be cut off by renewed fighting. Most severely, of course, the US embargo against Iran has cut its production by about 1.3 million barrels per day since August, with a White House goal of “zero exports” threatening a further loss of 800,000bpd or so. The US also imposed sanctions on Russia’s oil industry in 2014, over its annexation of Crimea, though these have not significantly affected production, and is threatening more measures against the Nord Stream 2 gas pipeline to Germany.

This extensive use of economic coercion reflects the United States’ new position as an exporter of oil and liquefied natural gas

This extensive use of economic coercion reflects the United States’ new position as an exporter of oil and liquefied natural gas. Under president Barack Obama, the US grew confident that its rising output gave it more freedom to risk taking adversaries’ oil off the market. Under Trump, the administration has become openly mercantilist – for instance, pushing its LNG into Europe by threatening Russian supplies, and acquiescing to Iraqi gas and electricity imports from Iran only if Baghdad awarded contracts to American companies.

Given the US administration’s quixotic pursuit of multiple conflicting foreign-policy priorities simultaneously, its Arab supporters have become even more important. The ability of Saudi Arabia, and to a lesser extent the United Arab Emirates and Kuwait, to use their spare capacity to add as much as 2.5mbpd to the market is crucial to dealing with unexpected contingencies as the campaign against Iran ramps up.

This betrays the Achilles’ heel of the United States’ newfound “energy dominance” – shale oil is not infinitely flexible nor as fast to respond as Saudi spare capacity. And the very light shale oil is not an ideal diet for refineries, currently short of medium and heavy grades – those produced in the Gulf region and by Venezuela and Russia.

After repeated Iranian threats to close the Strait of Hormuz, both the UAE and Saudi Arabia have constructed bypass pipelines that could carry about half of their exports. Kuwait, Qatar and Bahrain are completely dependent on the strait, though, and Iraq is mostly so. If indeed the recent attacks on shipping in waters off the UAE’s Fujairah emirate and on the Saudi East-West pipeline were at Iranian direction, Tehran was sending a message that these alternative routes were vulnerable too.

Even though the US has for long imported relatively little Gulf oil, its security posture there was a key part of the Western alliance system. Europe, Japan and South Korea were assured that neither the former Soviet Union nor a hostile regional monopolist could cut their supplies or jack up prices. Now that logic has evolved. Allies are seen more as vassals, obliged to adopt US economic dictates.

And the continuing US military presence in the Gulf region gives leverage against Washington’s only likely peer competitor, in Beijing, as well as its irritating rival in Moscow. Both countries have strong relations with Iran, which has few other friends.

China’s role in the Middle East still is largely limited to trade and investment. But its Belt and Road strategy involves building a maritime presence in the region, as well as strengthening overland Eurasian oil and gas import routes, less easily interdicted. In extremis, in the event of open conflict, the US still has its foot on China’s jugular.

Russia, meanwhile, has boosted its Middle Eastern role by returning to its old ally in Syria, and building political and economic influence in countries such as Egypt, Libya and Iraq. Its cooperation with the Organization of the Petroleum Exporting Countries (OPEC) has made it indispensable to Riyadh too. But Russia can never be a replacement for the US in the Middle East, just a useful counterweight.

Other interested parties – European countries and India – play only a marginal diplomatic and security role in the Gulf region, despite their economic importance and historic involvement. And so Washington complains of its unfair burden in the Gulf, while reaping the rewards of its stranglehold over any competitor.

This article was provided to Asia Times by Syndication Bureau, which holds copyright.

Asia Times Financial is now live. Linking accurate news, insightful analysis and local knowledge with the ATF China Bond 50 Index, the world's first benchmark cross sector Chinese Bond Indices. Read ATF now. 

Robin Mills

Robin Mills is CEO of Qamar Energy and author of The Myth of the Oil Crisis.

Join the Conversation

1172 Comments

  1. Thanks for the marvelous posting! I certainly enjoyed reading it, you might be a great author.I will make certain to bookmark your blog and will eventually come back later on. I want to encourage yourself to continue your great posts, have a nice weekend!

  2. Hi my family member! I want to say that this article is amazing, great written and include almost all important infos. I?¦d like to peer extra posts like this .

  3. Thanks for another wonderful post. Where else may just anybody get that type of info in such a perfect approach of writing? I’ve a presentation subsequent week, and I am at the look for such info.

  4. It’s in point of fact a nice and helpful piece of info. I’m glad that you simply shared this useful info with us. Please keep us up to date like this. Thanks for sharing.

  5. Hi, i read your blog occasionally and i own a similar one and i was just wondering if you get a lot of spam remarks? If so how do you reduce it, any plugin or anything you can recommend? I get so much lately it’s driving me mad so any support is very much appreciated.

  6. Its such as you learn my thoughts! You appear to grasp a lot approximately this, such as you wrote the book in it or something. I feel that you simply can do with a few to force the message house a bit, but other than that, that is wonderful blog. An excellent read. I’ll certainly be back.

  7. I have been absent for some time, but now I remember why I used to love this site. Thank you, I will try and check back more frequently. How frequently you update your site?

  8. What’s Happening i’m new to this, I stumbled upon this I’ve found It positively helpful and it has helped me out loads. I hope to contribute & aid other users like its helped me. Great job.

  9. Hey very nice blog!! Man .. Excellent .. Wonderful .. I’ll bookmark your web site and take the feeds additionally…I’m glad to seek out so many helpful information here within the put up, we want work out extra techniques in this regard, thank you for sharing.

  10. Hiya, I am really glad I have found this information. Nowadays bloggers publish just about gossips and internet and this is really annoying. A good website with interesting content, this is what I need. Thank you for keeping this web-site, I will be visiting it. Do you do newsletters? Can not find it.

  11. I was just looking for this information for a while. After six hours of continuous Googleing, at last I got it in your site. I wonder what is the lack of Google strategy that do not rank this kind of informative websites in top of the list. Usually the top web sites are full of garbage.

  12. Great blog! Do you have any hints for aspiring writers? I’m planning to start my own site soon but I’m a little lost on everything. Would you advise starting with a free platform like WordPress or go for a paid option? There are so many options out there that I’m completely confused .. Any ideas? Kudos!

  13. Hmm is anyone else experiencing problems with the images on this blog loading? I’m trying to figure out if its a problem on my end or if it’s the blog. Any responses would be greatly appreciated.

  14. I cherished as much as you’ll receive carried out proper here. The caricature is attractive, your authored subject matter stylish. nonetheless, you command get got an shakiness over that you wish be delivering the following. in poor health definitely come further formerly again as exactly the similar just about very steadily within case you defend this hike.

  15. You actually make it seem so easy along with your presentation but I to find this matter to be really something that I feel I might by no means understand. It kind of feels too complicated and extremely large for me. I am having a look ahead for your next post, I will attempt to get the dangle of it!

  16. I together with my guys were actually checking the best pointers on your web site and suddenly got an awful suspicion I never expressed respect to the web blog owner for those tips. My ladies appeared to be certainly very interested to read through them and have in effect surely been having fun with those things. Many thanks for being indeed considerate as well as for figuring out this kind of useful subject matter most people are really desperate to be informed on. Our own sincere regret for not saying thanks to you earlier.

  17. I was more than happy to search out this web-site.I wished to thanks to your time for this excellent learn!! I definitely having fun with every little little bit of it and I’ve you bookmarked to take a look at new stuff you blog post.

  18. Terrific paintings! This is the kind of information that should be shared across the web. Disgrace on the seek engines for now not positioning this post higher! Come on over and seek advice from my web site . Thank you =)

  19. We absolutely love your blog and find a lot of your post’s to be just what I’m looking for. Does one offer guest writers to write content for yourself? I wouldn’t mind composing a post or elaborating on many of the subjects you write concerning here. Again, awesome site!

  20. I’m really enjoying the design and layout of your website. It’s a very easy on the eyes which makes it much more pleasant for me to come here and visit more often. Did you hire out a developer to create your theme? Fantastic work!

  21. Undeniably believe that which you said. Your favorite justification seemed to be on the web the simplest thing to be aware of. I say to you, I definitely get annoyed while people think about worries that they just do not know about. You managed to hit the nail upon the top and defined out the whole thing without having side-effects , people could take a signal. Will likely be back to get more. Thanks

  22. Whoa! This blog looks exactly like my old one! It’s on a entirely different topic but it has pretty much the same layout and design. Outstanding choice of colors!

  23. Heya! I just wanted to ask if you ever have any trouble with hackers? My last blog (wordpress) was hacked and I ended up losing many months of hard work due to no back up. Do you have any methods to stop hackers?

  24. Wonderful items from you, man. I’ve be aware your stuff previous to and you’re simply too fantastic. I actually like what you’ve got here, really like what you are saying and the best way through which you are saying it. You are making it enjoyable and you still care for to keep it wise. I cant wait to learn much more from you. That is really a terrific site.

  25. Just want to say your article is as astounding. The clearness in your post is just cool and i can think you’re a professional in this subject. Well with your permission allow me to take hold of your feed to stay up to date with approaching post. Thank you 1,000,000 and please carry on the gratifying work.

Leave a comment

Your email address will not be published. Required fields are marked *