Ayatollah Ali Khamenei, Iran’s Supreme Leader, accused unnamed OPEC members of using oil as a weapon to the benefit of the U.S. The accusations were leveled via Twitter, following Khamenei’s meeting with Venezuela’s President Nicolas Maduro over the weekend.
In a series of tweets, Khamenei started by saying that the “drop in oil prices is a coercive measure against countries independent of the US,” then went on to remind his audience of the 1973 oil embargo from several Middle Eastern states that led to accusations from the West about “the political use of oil”, adding that “Today, same countries along with some OPEC members & regional states are using oil as a weapon in total compliance with US policies.”
The Khamenei-Maduro meeting was on the occasion of Venezuela taking over the presidency of the Non-Aligned Movement from Iran. Before that, Maduro met with Iran’s President, Hassan Rouhani, who declared the country’s support for “any measure” that aims to restore the balance on the oil market, adding that it necessitated coordination and cooperation among not just OPEC members, but external producers as well.
One of the OPEC members that Iran’s Supreme Ruler mentions in his tweets is almost certainly Saudi Arabia, which in April refused to take any steps to curb its oil output unless Iran took reciprocal steps, Reuters reported at the time, saying the Saudis, who had for decades rejected claims that they were using oil as a weapon, had done just that in Doha. Related: Russia Sends Mix Signals To Oil Markets After Saudi Meeting
Ironically, the effectiveness of the oil weapon seems to be significantly overrated. According to a 2012 publication by the Oxford Institute for Energy Studies, using oil as a bargaining chip seldom works, as Iran itself proved in that same year, after the U.S. imposed economic sanctions on it because of its nuclear program.
The trouble with oil-related threats, according to the OIES, is that it pretty hard to cut supply to the extent that it makes a difference for the consumers the weapon is pointed at. At the same time, it leads to loss of oil revenues, and most major oil producers and exporters are heavily dependent on these revenues, as Saudi Arabia has found after months of stalling all efforts to bring oil markets back to a balance.
By Irina Slav for Oilprice.com
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