Media Op-Ed

Oil Prices and Regional Confrontations: Iran

Written by

Oil-price-fallOIAC- Staff- The Associated Press indicates that Rouhani took just this approach in commenting on the persistently low oil prices, now down to about 65 dollars per barrel after having been 110 dollars in June.
Speaking at a Cabinet meeting on Wednesday, Rouhani unambiguously called the decrease a “conspiracy against the interests of the region, the Muslim people, and the Muslim world.” His commentary also turned vaguely threatening when he said “Iran and people of the region will not forget such conspiracies, or in other words, treachery against the interests of the Muslim world.”

While the comments were non-specific about the identity of so-called conspirators, they have generally been viewed as referring to Saudi Arabia and its opposition to OPEC oil production decreases that could serve to stabilize prices. Although that opposition may in fact be partly motivated by an effort to put pressure on Iran, the AP points out that the actual price decrease is attributable to weak global economic growth and an unforeseen boost in oil output from the United States.

The conspiratorial rhetoric about oil prices was also repeated by Iranian Vice President Eshag Jahangiri, who described the fall in prices as unnatural but went on to add that the Islamic Republic would manage its budget in spite of the decrease, “Even if the conspirators reduce the price of oil to 40 dollars.”

However, Al Monitor estimates that the minimum oil price that would make Iran’s budget workable is 80 dollars per barrel. Indeed, the national budget for the year beginning March 20 assumes an oil price of 72 dollars per barrel even though this is higher than the current price. Al Monitor emphasizes that this recalls past instances of excessive optimism about Iran’s oil economy.

That optimism and Iran’s insistence that it can manage low oil prices appear to be in tension with Iranian officials’ propensity for verbally attacking the nations and groups that it views as being behind those prices.

While there is a limit to how much control those entities can exert over oil prices, it is true that many OPEC nations are eager to put pressure on Iran as a result of its growing influence in the region and the perceived threat that this poses to Sunni powers like Saudi Arabia and Bahrain. The Associated Press reported on Wednesday that the six-member Gulf Cooperation Council has agreed to form an “Interpol-like force” in the Gulf region that will be tasked in part with meeting the threat from terrorist and rebel groups backed by Shiite Iran.

About the author

X