IRAN’S OIL TRADE AND US MARITIME NAVIGATION

Iran's oil trade and US Navigation
Photo via wikimedia.org

Currently, China is the largest partner of Iran’s oil trade. US authorities are disturbed over the rising oil trade between Iran and China. In a recent move, the USA warned Chinese shipment companies to avoid carrying Iranian oil or else sanctions will be imposed. A US defense official told RushHourDaily on condition of anonymity that China’s behavior is dangerous and irresponsible. 

In May 2019, the US strengthened its sanctions on Iran to bring Iran’s oil trade to zero. The sanctions were imposed to counter Iran’s nuclear program, ballistic missile program and its proxies in Yemen, Iraq, and Syria. After the US sanctions, Iran’s exports fell from 2 million barrels per day to 400,000 barrels per day. US sanctions were a big blow for the Iranian oil sector. 

In September the US imposed sanctions on five Chinese individuals and two shipping entities belong to China. The US accused that the shipping entities were carrying the Iranian crude oil in violation of US sanctions. At the start of October, 14 COSCO shipping tankers stopped sending their location from the Automatic Identification System (AIS). The US navy officials believe that COSCO deliberately switched off AIS to hide the location. Meanwhile, in an email statement, COSCO said that none of its vehicles turned off AIS. The email further states that COSCO is strictly following the international maritime laws. 

Iran has decades-long experience of dealing with sanctions. Currently, Iran is silently waiting for US presidential elections which will be held in November 2020. Iran hopes that Trump will lose and the new administration will give some relief to Iran. Trump administration wants talks with Iranian authorities without any condition. But Iran seeks relaxation in US sanctions. This is why the Trump-Rouhani meeting could not be held on the sidelines of UNGA. 

On Friday, the US announced sending 3,000 troops to Saudi Arabia. This troops build-up is aimed at increasing defense of Saudi oil facilities after the last month’s attack. Both the USA and Saudi Arabia believe that Iran is behind these attacks. However, Iran denied any involvement. 

Experts believe that the USA is trying to fight on two fronts. The first front is the US-China trade war and the other is Iran. By effective maritime navigation, the US can accomplish both the goals. However, the USA will also need the cooperation of UAE and Saudi Arabia. 

Firstly China and India were the main buyers of Iranian oil. But India stopped oil trade with Iran after US sanctions. Now China has filled the vacuum and signed 500 Billion dollars deal with Iran. About 70 percent of this budget will be spent on Iran’s oil sector. While rest will be spent on roads, railways and other infrastructure projects. Experts believe that China has the potential to purchase the entire Iranian oil produced per day. So if China decides to buy Iranian oil, Iran will not need any other buyer for its petroleum products. 

This multi-billion dollar deal has become a headache for US administration. Economic experts believe that this China-Iran deal can neutralize US efforts to drive Iran’s oil trade to zero. However, US experts believe that effective maritime navigation can stop China to buy oil from Iran. However China has options to transport oil from Iran through the land route via Pakistan. 

Conclusively we can say that China is trying to neutralize US economic influence in the Middle East. For this purpose, it is using US-Iran rivalry. Experts believe that bringing Iran’s oil trade to zero is no more an easy task for the USA. The only coming time will tell how much the US succeeds in bringing Iran’s oil trade at zero. 

Related: Iran Releases British Oil Tanker as IAEA Accuses Country of Breaching Nuclear Deal

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