Tehran’s general strategy towards the United States is to seek to push new President Joe Biden to return to an unrenegotiated nuclear deal, which favors Iran, while allowing Iran to be its own backdoor to continue exporting its own crude oil and other related products. . The past week saw significant developments on both sides of this equation, with Iran dramatically increasing its nuclear threat but also putting in place one of the last key elements that will allow it to export crude directly to its major oil markets in Asia.
Regarding its nuclear threat, Iran has been waiting since former President Donald Trump unilaterally pulled the United States out of the Joint Comprehensive Plan of Action (JCPOA) for a new – and potentially gentler – Democrat to take his place, as they had been advised by John Kerry, Barack Obama’s former secretary of state, according to Trump’s former national security adviser John Bolton. Since the new man was in the Oval Office, Iran has gradually increased the pressure on him to join the original JCPOA. Even before Biden was officially sworn in as president, the Iranian Islamic Revolutionary Guard Corps (IRGC) seized the 20,000 metric ton South Korean tanker Hankuk Chemi and moved it to an Iranian port between Qeshm and Larak Island on the pretext that the ship was responsible. for “oil pollution”. More seriously about the global implications were subsequent comments by Iranian Foreign Minister Javad Zarif that Iran has restarted 20% uranium enrichment at its underground nuclear facility at Fordow. This is in direct non-compliance with the terms of the JCPOA, as initially agreed in 2015, then formally implemented on January 16, 2016. Specifically, Zarif added: “Our measures are fully reversible in the event of full compliance. [with the JCPOA] by all.”
Also last week, Iranian President Hassan Rouhani said the United States should comply with United Nations Security Council Resolution 2231 – which was a July 20, 2015 multilateral resolution endorsing the JCPOA – and added that the United States should comply with international regulations. “The implementation of international rules, laws, obligations and treaties is one of the human and political duties of all governments, which is why we hope that they [the U.S. government] respect the law and we will be able to conduct our interactions in better conditions in the world, especially in the trade sector, ”he underlined. Related: Texas Cold Blast Was A Warning For Hydrogen Investors
Shortly after Rouhani’s comments, Iranian Foreign Ministry spokesman Saeed Khatibzadeh said the country would stop complying with the IAEA’s additional protocol to the NPT later this month. [the ‘Treaty on the Non-Proliferation of Nuclear Weapons’ which came into force on 15 May 1974] Safeguard Agreement ”if the other parties to the JCPOA (including the US, UK, France, Russia, China and Germany) fail to honor their commitments. He added, however, that Iran would continue its cooperation with the IAEA and stressed that the three European signatories of the JCPOA should re-commit themselves to abide by the obligations of the agreement. Critically, and signaling that Iran will stick to the original draft of the agreed JCPOA – and absolutely will not renegotiate a newer (and certainly more difficult) version that would almost certainly include provisions against missile testing, he said. added: “Missiles and [the] JCPOA are two completely different problems. “
Following all these implicit and direct threats, Iran further informed the IAEA last week that it plans to install more of its advanced IR-2m centrifuges at its massive underground uranium enrichment plant. to Natanz, according to a number of sources. Specifically, Iran told the IAEA it would add the installation of two additional cascades of 174 IR-2m centrifuges to the fuel enrichment plan (FEP) to enrich up to five percent U -235. According to IAEA data, this will bring the total number of IR-2m centrifuge cascades planned, installed or operating in FEP to six. This is in addition to the 20% + enrichment that is currently happening at the Fordow plant. “With those [enrichment] developments and missile delivery capabilities possible thanks to the [25-year] dealing with China, breakthrough time [the time it will take Iran to produce nuclear weapons-purity uranium of 90 per cent] for Iran and the time for it to be able to deliver these [nuclear] the weapons have decreased considerably compared to a year ago, ”said a Moscow-based source close to the Iranian government. OilPrice.com Last week.
The IRGC – which now basically controls foreign policy in Iran, with the full backing of Supreme Leader Ali Khamenei – believes the United States has limited options to counter these moves by Iran, with major military options severely limited . by Iran’s closer relations with China and Russia. Aside from the specific military elements related to the 25-year agreement with China, it should be remembered that Russia also plays a role when necessary in a tripartite relationship. Russia sent a reminder of that last week with joint naval exercises in the northern Indian Ocean. Although theoretically characterized as aimed at “ contributing to maritime security and combating piracy and terrorism, ” the message to the United States was indeed very clear, with the exercises comprising naval and air units from the Navy. Iranian Army and IRGC Navy, and a number of Russian Navy Ships and Air Support. Later this year, OilPrice.com understands that there will be a much larger set of maneuvers held off Iran, featuring both Russia and China, echoing naval exercises (and supporting aerial) organized in December 2019 between the three countries. As Iranian Navy Rear Admiral Hossein Khanzadi said in November 2019 just before these exercises: “A joint war game between several countries, whether on land, at sea or in the air, indicates a remarkable expansion of cooperation … and maneuvers carry the same message to the world, that these three countries have reached a significant strategic point in their relations. Related: Gas Companies ‘Hit the Jackpot’ on Deep Freeze
On the other side of the equation, Iran is in the very last step of completing its game-changing Goreh-Jask pipeline project, with a major breakthrough last week being loading into the industrial yard. of Khorramshahr of Single Critical Point Mooring (SPM), multi-track and auxiliary submarine equipment required in the Jask Oil Terminal Project. This, along with the earlier start of offshore pipeline-laying operations, puts the entire project on hold for completion by the end of the current Iranian calendar year ending March 20 of this year. . Following the completion of this first phase of the project, the Goreh-Jask pipeline will begin comprehensive pumping tests to verify its ability to transfer 350,000 barrels per day (b / d) of light, heavy and ultra-heavy crude oil to the 1,100 km – a 46-inch-diameter oil pipeline that connects the oil terminal at Goreh, in the northwest of Bushehr province, to Mount Mobarak, in the western Jask region, along the Arabian Sea.
Upon completion of the initial phase one infrastructure testing, with 350,000 b / d transferred, the figure will increase to a daily delivery capacity of 460,000 b / d of heavy crude oil and 254,000 b / d. of light crude oil to export terminals. Phase 2 will involve the transfer of over one million barrels of crude oil to export terminals. The oil will then be stored once it arrives at Jask in one of 20 storage tanks each capable of storing 500,000 barrels of oil, in the first phase (totaling 10 million barrels) for later loading onto very large crude carriers. (VLCC) moved from the Gulf of Oman to the Arabian Sea, then to the Indian Ocean. The second phase will see an extension to an overall storage capacity of 30 million barrels.
Beyond the technical details, the key point is that the pipeline will allow Iran another method by which it can export huge amounts of oil without falling prey to US sanctions and it will also allow Iran to do it while causing chaos. for a third of the rest of the world’s oil shipments through the blockade of the Strait of Hormuz, if he so wishes again. Another bright spot for Iran is that having huge oil storage capacity just steps from Pakistan and then China will likely result in the final green light for the construction of the oil and gas pipeline. Iran-Pakistan, and then put additional pressure on the development of India-UAE-US relations as India may well think resuscitation of the Iran-Pakistan-India pipeline is preferable to current plans with the UAE. It also means that Iran can send oil supplies – and whatever it wants from tankers – to the Houthi faction in Yemen to maintain a constant threat on Saudi Arabia’s southern flank and also to groupings of militias in Somalia and Kenya.
By Simon Watkins for OilUSD
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