Iran is looking to persuade its regional rival Saudi Arabia to help it to sell Iranian crude oil on international markets in exchange for limiting attacks from the Iran-aligned Houthi rebels in Yemen on Saudi oil infrastructure, Middle East Eye reported on Wednesday, quoting Iraqi officials with knowledge of recent secretive Iranian-Saudi talks in Baghdad.
Iran is currently negotiating with the signatories to the so-called nuclear deal, as well as indirectly with the United States, to potentially return to the Joint Comprehensive Plan of Action (JCPOA). The U.S. withdrew from the deal in 2018 and slapped sanctions on Iran's oil exports, which have crippled Iranian crude sales abroad. Despite the U.S. sanctions, Iran has been exporting part of its crude oil, and exports have been estimated at around 500,000 bpd recently.
Yet, until the sanctions are in place, Iran is looking for alternatives to have its oil sold on the international markets, and is reportedly looking to negotiate with Saudi Arabia for this. The Saudis, for their part, are looking to end the recent flare-up of attacks on Saudi Aramco oil facilities from the Houthis in Yemen.
Saudi Arabia and Iran held direct talks in Iraq last month, the Financial Times reported at the time. The talks reportedly involved the proxy war in Yemen and the recent increase of attacks from the Houthis on oil facilities and oil infrastructure targets in Saudi Arabia.
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According to Middle East Eye's sources, Iran and Saudi Arabia held another round of talks in Iraq last week, again focused on the war in Yemen.
During the talks last week, Iran "offered to sell it [the oil] 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," a senior Iraqi official close to Iran and familiar with the talks told Middle East Eye.
Saudi Arabia demanded an end to the Houthi attacks, and this was their biggest interest in the talks, according to the Iraqi officials familiar with the talks.
By Tsvetana Paraskova for Oilprice.com
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Comments
Therefore, Iran will demand far more than Saudi help to sell its crude since it is already selling an estimated 1.5 million barrels a day (mbd) of crude oil or 71% of its pre-sanction level of which China alone accounts for 1.0 mbd with the remainder going to India, North Korea, Turkey and score of other countries. Iran is managing to evade US sanctions by ship-to-ship transfers, disguised as Iraqi oil, changing the documentation of its oil shipments frequently, open sales to China and India and barter trade.
Still, if the the Iranian request is true, then it could be interpreted as an admission by Iran that it doesn’t expect US sanctions to be lifted soon. I have been arguing that US sanctions on Iran may never be lifted even by 2023 or ever. The reason is that the positions of the United States and Iran are irreconcilable.
For ending the Houthis attacks on Saudi oil infrastructure, Iran will demand an immediate end to its war in Yemen, a recognition of the Houthis as the legitimate government in Yemen and compensation to help re-build damaged Yemen. It will also demand a Saudi disengagement from United States’ anti-Iran policies and support for Bashar Al Assad regime in Syria and, by extension, acceptance of Iran’s involvement in Syria.
In a nutshell, Iran will extract a very heavy price from Saudi Arabia for ensuring the safety of the Saudi oil industry. Saudi Arabia has no alternative but to oblige.
Moreover, the geopolitical balance in the Gulf region is already tilting towards Iran as judged by the talks between Saudi Arabia and Iran, the continued harassment of US Navy ships by the IRGC Navy in the Strait of Hormuz and also the completion of the Iranian Goreh-Jask oil pipeline that allows Iranian crude oil exports to bypass the Strait of Hormuz thus enabling Iran to use the threat of closing the Strait of Hormuz for political reasons without hindering its own oil exports.
Dr Mamdouh G Salameh
International Oil Economist
Visiting Professor of Energy Economics at ESCP Europe Business School, London
To verify this all you have to do is go back to the date of January 1, 2000, when Y2K was upon us and every pipeline pump station was online but had employees at each pump station and were operating manually-perhaps the hackers did not listen very well to their History teacher in high school. Or perhaps they did not go to school