The current crisis in West Asia hangs by a fine balance —and held by the stability of oil prices. That alone makes it possible for several countries like India to hold their nerve for the time being. But will that continue to be the case? The US, as of now, seems to be indicating that it will ensure that it will remain this way.
Oddly, this is exactly the sort of guarantee many would have not expected US President Donald Trump to offer, given his political stand against Washington’s burdening global responsibilities that accrue no benefit to the American people. That’s the logic which informs his government’s approach to draw down US military presence across the globe. It forms the basis of his protectionist approach to trade, to China, and develop ‘America First’ options.
Yet, we now have a Washington backstopping oil prices. It has done so, quite consistently, throughout Trump’s term largely on the back of record-breaking US domestic crude production. In fact, between the drone attacks on the Saudi Aramco oil facilities in September and until December last year, the US ensured there was hardly any fluctuation in oil prices, with supplies kept available at about the same price.
The same trend has followed the US drone strikes near Baghdad International Airport on January 3 that killed Iran’s powerful Quds commander Qasem Soleimani. After the initial shock, the prices have held, much to the relief of big importers like India, Japan and South Korea.
The Iranian military response has not moved the price needle either. This is quite unlike the first Gulf War, which saw prices spike by about $15 between August and October 1990. Even in 2003, prices rose quite sharply compared to the recent trend.
The big change has been the emergence of the US as a major oil producer. Indian oil imports from the US have quadrupled over the last couple of years. Conventional economic wisdom would suggest that in such a scenario, US companies only stand to benefit if there’s a surge in prices. But then, the price of oil has always been a political question, just as has been its rate of production.
Currently, stability of oil prices is in Trump’s political and strategic interest. It reassures other big economies to stay away from any plausible Sino-Russian alternative. Also, it underscores US dominance over West Asia that was being questioned as other countries in the region began to reach out to Iran after the attack on the Aramco oil facilities.
That Trump chose reassertion of US power is a clear indication that he doesn’t want his intent to reduce troop presence to translate into commensurate reduction in influence, or the shrinking of strategic footprint. Washington wants supremacy, but through ways that don’t involve boots on the ground.
The innovative use of drones has provided the US with a deadly option with precision. The transgression of sovereign territory isn’t any longer an insurmountable question as long as it’s a targeted (read: with the least collateral damage) strike against terrorists. This was exactly how India sought to describe its attack on the terrorist camps in Balakot after the Pulwama attack. These are framed as asymmetric responses to terror attacks, rather than conventional strikes.
So, what does this mean politically? It essentially provides a viable military option without having to move up the escalatory ladder. Much like the Pakistani response after Balakot, Iran attacked Iraqi territory with missiles, but looked to de-escalate. Tehran’s matters have complicated immensely after its wrong strike on a Ukrainian commercial plane. The US, too, has sought to de-escalate.
There is now a window within the escalatory matrix between two conventional State actors where targeted strikes are politically possible, without the threat of outright escalation to war. For the US, this seems to be a great alternative in exerting authority and supremacy without actually having to make investments on the ground.
As for Iran, the battle is truly regional. In West Asia, regardless of political differences, the consensus around oil has usually been largely on the basis of mutual recognition of the high stakes involved. If there’s a country that can be potentially disruptive or unpredictable, it’s Iran. The political urge to harness Shia power spread across Iran, Iraq and in other West Asian countries can be a security threat to the region, which is where the US tilts the balance.
On the other hand, action against Iran resonates domestically in the US like no other country in the region. More so, anti-Iran sentiment is bipartisan. Which is why the fact that Trump has been able to bring down Iranian oil exports to almost zero is considered politically significant.
Don’t Slip on Spilt Oil
India, for its part, will have to reconcile Iranian regional ambitions with a repackaged US idea of global power. And in doing so, it would have to take into account that 65% of its crude comes via the Iran-controlled Strait of Hormuz and about 20-22% of its crude is sourced from Iraq — not to forget the Chabahar project connecting India to Afghanistan via Iran.
The truth is, it’s a new fight on a familiar old oil-spilled mosaic, with better technology and weapons to revive historical notions of power in a region where India has to be in business with all, at the cost of none.Share This