Due to the fact that oil is always a geopolitical factor, history over the last century demonstrates that there is no such thing as little oil. Many new conflicts have occurred commencing from the beginning of the 20th century as a result of oil. And today, oil still plays a solely geopolitical role in the conflict between the parties, with the ability to rekindle both small-scale and major wars.
One of the few nations with significant oil reserves is Iran. Iran is the third-largest oil producer in the world, with reserves that account for 13.5% of global oil reserves. Ahvaz, Marun, Aghajari, Gachsaran, Karanj, Bangestan, Dorud, Salman, Abuzar, Sirri, Soroosh, etc. are some of the largest Iranian oil fields. Iranian oil fields are located both onshore and offshore. Due to US sanctions imposed after the 1979 Islamic Revolution, Iran was unable to increase oil production and export it to international markets, which materially reduced its ability to compete with other oil-producing nations like Venezuela, Saudi Arabia, Kuwait, the United Arab Emirates, etc.
Iran is currently, however, forging beneficial connections with China and India, whose expanding production capacities need more oil. As you know, in March 2021, Beijing signed an agreement with Tehran to invest into the Iranian economy for the largest amount (more than $450 billion) for 25 years. A part of these funds will be utilized to modernize the Iranian oil and gas industry’s technology, as well as to create new energy and communications infrastructure. As a result of the agreement, China will be able to purchase Iranian oil at competitive prices, ending years of economic isolation for the Islamic Republic of Iran.
China engaged in systemic diplomacy, merging economic and political enterprises and bolstering regional security. As can be seen from this particular case of Iran, Beijing was successful in restoring diplomatic relations between Tehran and Riyadh, whose Embassies have already resumed operations. As a result of such diplomatic accomplishments, China is restoring Iranian-Arab relations in the strategically significant Middle East region, as well as in the Persian Gulf and Gulf of Oman, areas of priority importance in global trade and security challenges. These particular policies enable Beijing to rely on profitable purchases of the same oil from Iran and the Persian Gulf Arab monarchies.
The aforementioned political, diplomatic, and economic achievements in Sino-Iranian-Arab relations have seriously undermined American efforts to monopolize and rule the Middle East, allowing Iranian President Ebrahim Raisi to publicly call for the withdrawal of American forces from the area today.
However, Washington and the current regime in Israel led by B. Netanyahu are still trying to compete with the established quad between Beijing, Moscow, Tehran and Riyadh. The United States is attempting to use the capabilities of the 5th Fleet of the Navy, which is stationed in Manama, Bahrain and whose domain includes the western Indian Ocean and the Persian Gulf, to take action to block the oil flow between Iran and China.
For instance, the US apprehended the Suez Rajan carrying Iranian oil in the Gulf of Oman in April and changed the intended route to China to the United States instead, believing that Tehran had violated the system of oil trade sanctions. As a matter of fact, this American response to the situation was a form of maritime piracy. At the time, the Iranian Navy was unable to obstruct US Navy operations in the Strait of Hormuz and the Gulf of Oman.
Shortly after, Iran reacted against the United States in the Strait of Hormuz. On April 27,the Islamic Revolutionary Guard Corps (IRGC) navy captured the Marshall Islands-flagged oil tanker Advantage Sweet, owned by the United States, which was loaded with oil in Saudi Arabia and Kuwait.
The real cargo was insured by the American Chevron Corp. The ship had been seized by the Iranians after they waited for the Americans to transfer the money to the Arabs and the ship to be completely loaded. Despite the tanker’s Chinese registration, which gave the United States hope for a trouble-free trip through the Strait of Hormuz and the Gulf of Oman, the Iranians detained it. The latter shows that Tehran was aware of the channels of communication between the Chinese and Saudi governments on the insurance index, the ship’s loading, and the transfer of funds. The Iranian Navy’s operation was seen by the British newspaper Financial Times as retaliation for the earlier American military seizure of Iranian oil.
Vice Admiral Charles B. Cooper, Commander of the US 5th Fleet, admitted his shortcomings after failing to effectively combat the IRGC Navy. With this action, Iran, which has the support of China, Russia, and Saudi Arabia, demonstrates its power and launches the selective blocking of Western oil tankers. Therefore, the competition for energy resources and maritime and land-based transit communications is once more taking on a combative tone. The West might be robbed of a sizable portion of its energy resources. For instance, since 1983, US strategic oil reserves have been at their lowest level (from 640 million barrels in reserve to 460 million barrels).
Along with the Persian Gulf, the Gulf of Oman, the Bosphorus Strait, the Suez Canal, and the Panama Canal, the Strait of Hormuz is a crucial energy communication route where oil and merchant fleets transport oil from the Middle East’s richest energy region. The region’s fleets may shut the Strait of Hormuz, causing a real economic crisis and energy resources scarcity in the West.
As a type of retaliation for Iran and Saudi Arabia’s reunification under China’s protection, the United States permitted the public routing of a nuclear submarine into the Gulf of Oman. However, the American boat could not remain undetected as it attempted to cross the Strait of Hormuz. It was detected by the Iranian Fateh submarine and forced to surface and then removed.
Iran and Saudi Arabia have no objections to selling and exporting their oil to Western nations, including the USA and the UK. Tehran and Riyadh, however, are opposed to their oil being insured and transported by firms under the supervision of the United States and the United Kingdom. As a result, Iran provides the same Western partners with sales, insurance, and transit agreements in Tehran and Riyadh, or in Beijing and Moscow. Such a move on the part of Iran lessens the Anglo-Saxon dominance in the area, at the very least strips them of their monopoly, and necessitates respect for the partners and oil-producing nations’ interests.
It remains to be seen if the “tanker war” in the Strait of Hormuz will be followed by another naval conflict over the Middle Eastern region’s energy resources. But times change, and the primary nuclear powers, represented by Russia and China, Iran, the KSA, other Arab kingdoms are coming together to form a new alliance in this region. Who knows, maybe after a short time pragmatic Israel will opt for peace and trade, repeating the experience of Iran and Saudi Arabia with the protection of China? Everything flows, everything changes.