Crisis Around Iran: It’s All About Oil – OpEd

By Ilya Kharlamov

The deterioration of the situation around Iran, to which the US has made a considerable contribution, is making the US government develop the country’s own strategic reserves of oil because the population is getting angry about the growth of gas prices.

At the same time, high oil prices on the world market are in the interests of oil companies planning profitable oil extraction in the US and Canada.

US President Barack Obama’s administration is being urged to grant permission to use strategic oil reserves. Otherwise, US oil producers and experts state, the US economy will soon feel the negative consequences of the growing oil prices. At the end of last year, the government allowed commercial exploration of the national oil reserves in Alaska.

Instability in the Middle East, first of all in Iran, is the main reason for growing oil prices in the US, Barack Obama declared in Miami last week. However, he did not mention the US role in contributing to this instability. Ordinary Americans see the growing oil prices as the result of Obama’s policy and this becomes an additional risk factor during the presidential election campaign. Small wonder that Obama’s rivals are playing up this subject in their election speeches.

The escalation of the Iranian conflict is not in the interests of the current US authorities, Director of the Power Development Foundation Sergey Pikin says.

“It can have a negative impact on the US Administration’s ratings, which may give power to a different administration. But in my opinion, the Administration may be even more opposed to solving the problem with military methods. All this would have a very negative impact on the world market”.

Evidently, high oil prices in the US are not in favour of the current president. The policy of reducing the dependence on oil imports declared by the US government will be long in taking effect, as this is a difficult and capital-intensive process.

However, the sanctions against Iran, after the introduction of which Iran is threatening to block the Hormuz Strait, may be profitable for US oil and gas companies, financiers and the military-industrial complex, Director of the Institute of National Energy Sergey Pravosudov says. Recall that 45% of world shipping of oil is carried out through the Hormuz Strait.

If Iran blocks the Strait the oil price will rise again, which will make it profitable to explore the reserves of oil and gas, including shale gas, which are deposited on the territories of the US and Canada and which are difficult to extract. This opens great prospects for North American oil companies which are first of all interested in their business and not the Iranian nuclear programme which became the formal reason for the US and its allies’ displeasure.

Not only the oil complex but the entire US economy stands to gain by high oil prices on the world market, expert Dmitry Alexandrov from the Univer-Kapital company says.

“High oil prices give an impetus for exploring alternative sources of power on the territory of the US. And the main thing is that, for the US, high prices and instability in the Middle East first of all mean high prices in South-East Asia. The US gets a considerable advantage in the price of energy for its own producers.