More money at the gas pump may be the price of pressuring Iran

More money at the gas pump may be the price of pressuring Iran
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Good news: Reasonable prices for the gasoline you will buy for the summer driving season are being guaranteed by Saudi Arabia and other OPEC countries.

Huh? Who says? Actually, President TrumpDonald John TrumpHarris bashes Kavanaugh's 'sham' nomination process, calls for his impeachment after sexual misconduct allegation Celebrating 'Hispanic Heritage Month' in the Age of Trump Let's not play Charlie Brown to Iran's Lucy MORE says so.

He tweeted Monday morning: “Saudi Arabia and others in OPEC will more than make up the Oil Flow difference in our now Full Sanctions on Iranian Oil.”

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In other news: Oil prices rose. Put simply, the market apparently did not see the withdrawal of waivers, which have allowed countries such as Turkey, India and China to import Iranian oil without penalty until now, with the same optimism.

The president’s tweet had been tee’d up the previous evening by Josh Rogin in the Washington Post, who reported the State Department was set to announce that all countries will have to completely end their imports of Iranian oil or be subject to U.S. sanctions. Ambiguously, the Post used the headline “…The United States will try to force Iranian oil exports to zero,” while Rogin’s column quoted an unnamed senior State Department official as saying “zero Iranian imports,” probably meaning “zero imports of Iranian oil” — a subtle but important difference.

While many Americans will only concern themselves with the prices at the pump, these policy details are important. On the one hand, Iran’s Islamic regime may just be squeezed to the point of changing its malevolent behavior in the Middle East. On the other, because of Tehran’s oft-repeated position of not allowing anyone else to export oil from the Gulf if it cannot, there may be a shooting war.

The arithmetic of the policy is that, according to the White House, Saudi Arabia and the United Arab Emirates (UAE) will make up any shortfall in world oil supply. Sounds good, except Saudi Arabia’s own official statement on the issue was: “The kingdom would like to reiterate its longstanding policy of working towards oil market stability at all times. Accordingly, Saudi Arabia will coordinate with fellow oil producers to ensure adequate supplies are available to consumers while ensuring the global oil market does not go out of balance.” President Trump’s tweet of “more than make up” implies prices will go down. The Saudi statement makes no such commitment.

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While Saudi Arabia has plenty of so-called “spare capacity” to increase production, the UAE has much less. Nevertheless, the president appears to think he has some sort of promise; he spoke by telephone about the issue with the UAE’s Crown Prince Mohammed bin Zayed last Thursday. That was the day the Mueller report came out. MbZ, as he is called, is listed on page 411 of special counsel Robert MuellerRobert (Bob) Swan MuellerFox's Cavuto roasts Trump over criticism of network Mueller report fades from political conversation Trump calls for probe of Obama book deal MORE’s 448-page document, where he is described as “Crown Prince of Abu Dhabi and deputy supreme commander of the United Arab Emirates (UAE) armed forces.”  Intriguingly, he was at the resort in the Seychelles at the same time as Erik Prince, who met the Russian Kirill Dmitriev and MbZ’s adviser, George Nader, there.

So far, Iran’s reaction to the U.S. decision has been cautious. A Foreign Ministry spokesman said his country “did not and does not attach any value or credibility to the waivers.” The long-held view of President Hassan Rouhani, perceived as a moderate in Tehran, especially compared with the Islamic Revolutionary Guard Corps, is that “if Iran’s oil is not exported, no regional country’s oil will be exported.” It will be interesting to see if he repeats these words in the next few days. The term “regional” presumably means Saudi Arabia, Bahrain, Iraq, Kuwait, Qatar and the UAE. Together they contribute a very sizable portion of the world’s oil trade.

Back in Washington, a senior administration official who briefed reporters on condition of anonymity, said any move by Iran to close the strategic Strait of Hormuz in response would be unjustified and unacceptable, according to Reuters. If the intention was not to sound bellicose, it would have succeeded, though it surely underplayed the deterrent value of the Bahrain-based U.S. Fifth Fleet and other elements of U.S. Central Command, particularly U.S. Air Force contingents in Qatar and the UAE.

As with other foreign policy decisions from the Trump administration, it is often difficult to see whether this move is part of a grander plan or just a step that someone thinks seems worthwhile taking. It is tempting to link it to events in Sudan, where a new military junta has just been showered with both Saudi and Emirati money. Or Libya, where a Saudi- and UAE-backed military strongman, Khalifa Haftar, shrugged off a warning by Secretary of State Mike PompeoMichael (Mike) Richard PompeoSchiff: Diplomacy with Iran 'only way out of this situation' Bolton exit provokes questions about Trump shift on Iran Buttigieg: Not too late for US to be 'constructive force' in Middle East MORE earlier this month, only to be endorsed by the White House last week. Perhaps there is also a link to the yet-to-be-announced Middle East peace plan, though that is harder to discern.

The conventional wisdom is that sanctions help policy but in themselves are not policy.  Persuading Tehran to change its spots is certainly worthwhile, but is proving to be an uphill task. This latest policy twist of heading to “zero” needs Russia, another major oil producer, to play ball, and risks a further trade argument with China, which is indicating it will continue to buy Iranian crude. In likely reality, the “zero” will be around 1 million barrels of oil per day sold to China despite U.S. objections. That’s about a third of Iran’s technical export capacity and a possible regime-saving source of revenue.

President Trump may well be judging that U.S. voters neither want to pay more for their gas, nor do they want another war. It may well require considerable good fortune to avoid one or the other, or both.

Simon Henderson is the Baker Fellow and director of the Bernstein Program on Gulf and Energy Policy at the Washington Institute for Near East Policy. Follow him on Twitter @shendersongulf.