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Oil Output Disparities Highlight Conflict between Iran and Saudi Arabia

OPEC countries led by Saudi Arabia and non-OPEC countries led by Russia are set to meet in Doha, Qatar on April 17 to discuss the extension of a tentative output freeze that was agreed among some of those countries last month. The preliminary discussions apparently helped to create a situation in which a number of OPEC states did in fact reduce their production for March. The observed increase is in large part a result of Iran’s 100,000 barrel per day increase in its own output, driven by a desire to reclaim market share and revive its economy after the suspension of US-led economic sanctions under the Joint Comprehensive Plan of Action.

This contrast between the oil policies of Iran and other OPEC member states is likely to be a source of tension in the Doha gathering. Agence France-Presse reported on Friday that the Saudis have declared that they will not freeze their own output if the agreement is not universal among participants in the talks. Iranian representatives are scheduled to be present, but Tehran has already made it clear that it expects to be exempted from any demands for output freezes or cuts.

AFP quotes Saudi Deputy Crown Prince Mohammad bin Salman as saying, “If there is anyone that decides to raise their production, then we will not reject any opportunity that knocks on our door.” Iran is all but guaranteed to go on raising its production as it pursues a goal of more than doubling its oil output over the coming year.

It might also be argued that Iran finds more incentive for this production increase in an effort to court additional conflict with Saudi Arabia, its primary rival for influence in the broader Middle East. That rivalry has worsened recently as the two countries back opposite sides, either directly or indirectly, in the civil wars in Yemen and Syria. Their mutual participation has led some analysts to see those and other current conflicts as being increasingly part of an overarching sectarian struggle, with Iran heading the Shiite side.

In January, the Saudis carried out the execution of a Shiite dissident cleric, leading Iran to decry its rival via state media. Soon thereafter, Iranian mobs stormed and damaged the Saudi embassy in Tehran and the consulate in Mashhad. Both countries have made superficial remarks in the aftermath suggesting that they are prepared for reconciliation, but reports on the oil price conflict and other recent events have made it clear that there are major roadblocks to such reconciliation.

The National Council of Resistance of Iran reported on Friday that new intelligence has revealed that Iran had attempted to recruit as many as 200 dissidents via its embassy in Riyadh, which was closed in the wake of the aforementioned attacks. The would-be recruits were to be used in support of established Iranian spying, and to perhaps also be financed for terrorist operations. The United States regards Iran as the world’s leading state sponsor of global terror.

Although this recruitment tool is now effectively cut off to Iran, the conflict between the two countries is steadily taking on a more international character, thanks in large part to the opening of the Iranian import/export market in the wake of its nuclear deal with the West. This development has paved the way for state visits between Iran and a number of surrounding countries, including some that enjoy traditionally strong relations with Saudi Arabia.

Iran News Update previously reported upon some of the potential implications of Iranian President Hassan Rouhani’s recent visit to neighboring Pakistan, a Sunni-majority country where Saudi Arabia has considerable influence. At the same time that the memoranda of understanding that were signed between Iran and Pakistan have some potential to undermine Saudi Arabia’s regional alliances, they could also threaten the established relations that Iran has with Pakistan’s rival, India.

This fact was underscored on Friday by a report in the Hindustan Times, which discussed Indian Prime Minister Narendra Modi’s planned visit to Riyadh this weekend. Not only does this directly parallel Rouhani’s visit to Pakistan, its significance is made greater by the fact that India has not sent one high-level representative to Iran since the implementation of the nuclear deal, even though it has ramped up its imports of Iranian oil.

The visit may present an opportunity for the Saudis to encourage India to take oil from them or from other OPEC countries that aren’t Iran. Such a move would potentially cut into Iran’s recovery and drive home the point about “not rejecting any opportunity” if the Iranians refused to play ball with their fellow oil-exporting countries.

But even if Saudi Arabia does make this effort, its success depends upon India’s willingness to get caught up in the politics of the Middle East, which is as yet unproven, at least in the context of the Iranian-Saudi competition. And even if India is receptive to efforts that would undermine Iran, this can only have a limited impact on Iran’s prospects for its Asia oil exports. Although India is the second largest Asian market for that oil, the overall largest, China, is by all accounts an increasingly close ally of the Islamic Republic.

An article that appeared in Eurasia Review on Friday analyzed this relationship and reported that China sees Iran as a key component in its own energy security and also its access to markets for its export of manufactured goods. Because of this and because of various recent affirmations of Iranian-Chinese economic, political, and military collaboration, China is apparently eager to further expand its relations with the Islamic Republic, without regard for regional politics.

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