Prelims level : International Mains level : GS-II Governance, Constitution, Polity, Social Justice and International relations
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Why in News

  • The American stance on Iranian oil exports could only cause mayhem in West Asia


  • U.S. Secretary of State Mike Pompeo announced on that the United States would not issue any additional ‘Significant Reduction Exceptions to existing importers of Iranian oil who had received such exemptions last November.
  • Mr. Pompeo declared that the objective was to bring Iranian oil exports to “zero”. India, China and Turkey, the principal remaining oil importers from Iran, will feel the greatest impact of this policy.
  • The end of the waivers is expected to bring different responses from the main importers. China, one of the largest importers of Iranian oil, is likely to defy the American demand because as a great power and potential challenger to U.S. hegemony it will not want to be seen as bowing to American pressure.
  • Turkey and Iran have overlapping strategic interests regarding Kurdish secessionism, the territorial integrity of Iraq, and shared antipathy towards Saudi Arabia.
  • Iran is the second largest supplier of energy to Turkey and a leading trading partner as well. Furthermore, Turkey’s relations with the U.S. are currently rocky over U.S. support to the Syrian Kurdish militia, the YPG, that Ankara considers a terrorist organisation because of its close relations with the secessionist PKK.
  • The threat of American sanctions on Turkey following the latter’s decision to buy S-400 missile defence systems from Russia has also contributed greatly to tensions between the two countries. Therefore, it is unlikely that Turkey will bend completely to American will although it may do so partially to placate its NATO ally.

Indian capitulation?

  • The American decision could not have come at a worse time for India with the country in the midst of a bitterly fought election campaign and policy makers focussed on the domestic scene.
  • New Delhi is likely to comply with American demands, as India’s relations with the U.S. in the economic sphere are very important to it.
  • The U.S. is India’s largest trading partner and a leading source of foreign investment. It has become increasingly important in the strategic arena as well because of the convergence of American and Indian interests regarding containing China in the Indo-Pacific region.
  • Moreover, the civil nuclear relationship with the U.S. is very important for India, as is American support for India’s bid to enter the Nuclear Suppliers Group.
  • India is heavily involved in building the Chabahar port in southern Iran. This port is expected to become a major access route for India not only to Iran but also to Afghanistan and Central Asia bypassing hostile Pakistani territory.
  • Tehran is also important for New Delhi in the context of Afghanistan as both are unequivocally opposed to the Pakistan-supported Taliban returning to power even in a power-sharing arrangement.
  • India’s decision to stop importing oil from Iran at America’s behest could drive a wedge between New Delhi and Tehran that will be very difficult to repair and cost India strategically.
  • Additionally, it would entail Iran drastically curtailing if not completely eradicating its ballistic missile programme, and radically changing its
  • West Asia policy to fall in line with American preferences in Syria, Iraq, Lebanon and Yemen.
  • The current American policy of forcing Tehran to cut its oil exports to zero will only aid Iranian hardliners and end up with Tehran adopting an even more virulent anti-American posture, further impeding the realisation of American strategic objectives in the region.

A dark scenario

  • Pushed to the wall by its inability to export oil in sufficient quantities, Iran is likely to retaliate by withdrawing from the nuclear accord and resuming full-scale nuclear enrichment close to weapon grade-level.
  • Iranian retribution is likely to include air strikes against Saudi and Emirati targets as well and concerted efforts to block the Straits of Hormuz.
  • The mayhem that this action-reaction phenomenon will cause in the region can be disastrous for West Asia and could seriously disrupt the flow of energy supplies from the Gulf through the narrow Straits of Hormuz

Organization of the Petroleum Exporting Countries

  • Founded in 1960 in Bagdad HQ : Vienna 15 members
  • Gabon has rejoined OPEC in July 2016 Indonesia left OPEC in November 2016
  • It operates on the principle of unanimity, and one member, one vote
  • OPEC sets production targets for its member nations and generally, when OPEC production targets are reduced, oil prices increase
  • OPEC decisions have come to play a prominent role in the global oil market      and international relations
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