• 5 minutes Rage Without Proof: Maduro Accuses U.S. Official Of Plotting Venezuela Invasion
  • 11 minutes IEA Sees Global Oil Supply Tightening More Quickly In 2019
  • 14 minutes Paris Is Burning Over Climate Change Taxes -- Is America Next?
  • 31 mins Waste-to-Energy Chugging Along
  • 17 mins Contradictory: Euro Zone Takes Step To Deeper Integration, Key Issues Unresolved
  • 4 hours U.S. Senate Advances Resolution To End Military Support For Saudis In Yemen
  • 5 hours Venezuela continues to sink in misery
  • 3 hours No, The U.S. Is Not A Net Exporter Of Crude Oil
  • 4 hours Zohr Giant Gas Field Increases Production Six-Fold
  • 6 hours Regular Gas dropped to $2.21 per gallon today
  • 14 hours $867 billion farm bill passed
  • 16 hours Air-to-Fuels Energy and Cost Calculation
  • 16 hours What will the future hold for nations dependent on high oil prices.
  • 24 hours Has Global Peak Diesel Arrived?
  • 12 hours USGS Announces Largest Continuous Oil Assessment in Texas and New Mexico
  • 5 hours Global Economy-Bad Days Are coming
Alt Text

Iran Threatens To Close Key Oil Choke Point

With a U.S. aircraft carrier…

Alt Text

Former Venezuelan General Takes Helm Of OPEC

Ex-general Manuel Quevedo, Venezuela’s current…

Alt Text

What Would The End Of OPEC Mean?

OPEC is looking increasingly fractured…

Gregory R. Copley

Gregory R. Copley

Historian, author and strategic analyst — and onetime industrialist — Gregory R. Copley, 70, has for four decades worked at the highest levels with various…

More Info

Trending Discussions

The Real Reason Trump Killed The Iran Deal

U.S. President Donald Trump on May 8, 2018, fulfilled a major campaign promise to his voters by withdrawing the U.S. from the 2015 JCPOA (Joint Comprehensive Plan of Action) into which it had entered with Iran and the five permanent members of the United Nations Security Council plus Germany (the P5+1) in order to exclude the prospect of Iran developing an indigenous nuclear weapons capability until at least 2028.

But the Trump action is unlikely to bring about a meaningful improvement in the security situation of the U.S., Israel, or the Middle East generally, nor significantly damage Iran’s strategic capabilities.

President Trump’s move, however, clearly threw many aspects of U.S. global strategic policy into an area of uncertainty, even though it also promised a buffer period of around six months before President Trump would have to make some major decisions with regard to the U.S. withdrawal from the JCPOA.

The buffer period may, in fact, be his negotiating period with Iran, the DPRK, Europe, and others. Certainly, one aspect of the Trump action is that it changes some of the dynamics with regard to the President’s anticipated summit with North Korean (DPRK) leader Kim Jong-Un, which has been scheduled to take place within this “window of confusion” period which Trump created.

It was no coincidence that Kim Jong-Un met in Dalien, in the People’s Republic of China (PRC), on May 8 and 9, 2018, with PRC Pres. Xi Jinping — their second meeting in two months — knowing that the Trump decision on Iran was coming.

The U.S.-Iran disposition is a critical element in the options open to the DPRK in its negotiations on a proposed agreement to “de-nuclearize” the Korean Peninsula. Both Beijing and Pyongyang are aware that by putting the U.S.-Iran 2015 deal “in play”, Trump has introduced uncertainty for them in making plans which may require coordination with — and possible “deep-freeze” warehousing of strategic weapons in — Iran. The Trump decision to end U.S. participation in the JCPOA delivered the message to the DPRK and PRC that the U.S. President would deliver on his campaign promises, regardless of domestic or foreign pressure. It also sent a message to Tehran that Mr Trump had begun his “negotiating process” with Tehran, and that the coming six months’ buffer period would be a critical maneuvering time. Related: The Truth About Peace On The Korean Peninsula

So the unilateral decision by Mr Trump is part of a significant process, with ramifications in many areas. It has no clear-cut outcome; in other words, there are risks for many parties.

There is no doubt that Trump felt that the JCPOA was unworkable from the U.S.’ standpoint. He had telegraphed to Tehran that the accord needed to be upgraded, re-negotiated, or that a supplementary agreement needed to be reached. Tehran responded, indirectly, that it was not prepared to re-consider any aspect of the accord, and presumably felt that the European powers could persuade the U.S. President that a “work-around” policy could be developed.

Absent any signs of possible negotiation with Tehran, President Trump had only one card left to play, and that was withdrawal from the JCPOA. But it did not spell the end of all options, either for Iran, or for other players.

There is no indication that the decision would necessarily lead to an expansion of conflict in the Persian Gulf. Indeed, the Trump move gave some of the Arabian Peninsula states some time to re-group. Of significance is the reality that any potential constraints on Iran, through U.S. sanctions, could impact the country’s ability to sell oil on much of the world market, and this could drive up oil prices, something which would give Saudi Arabia some economic relief.

It could also positively aid the Russian economy, which is also heavily dependent on oil and gas exports, and therefore sensitive to oil pricing on the world market.

There is also, as the Iranian leadership responded on May 8, 2018, the reality that new U.S. sanctions would not seriously jeopardize the Iranian economy, although even minor downturns — along with the reduction in public expectations — could affect the mood of the public.

The real strategic ramification would be on European corporations being forced in the coming six months to decide whether they wished to continue doing business with the U.S., or whether they would choose to continue to pursue the commercial opportunities in Iran. This would primarily impact Airbus, as far as European Union (EU) companies are concerned, but it would equally hit Boeing in the U.S. Boeing would have to forego the sale of 110 airliners [15 B.777-9; 50 B.737 MAX 8; 15 B.777-300ER; and 30 B.737 MAX] to Iran Air — some of which were being produced for 2018 delivery — and Aseman Airlines. Iran Air had also contracted to buy 118 Airbus aircraft, including 12 Airbus A380 heavy widebody aircraft. But even by February 2018, Iran was looking for alternatives, including — in the single-aisle airliner category — the Russian 98-seat Sukhoi Superjet-100 light twin-jet. Some Airbus aircraft — 11 ATR twin-turboprop transports — had already been delivered to Iran by the end of 2017. Sales to Iran from Russia and the PRC would be unaffected by the U.S. sanctions.

What is significant is that the sanctions would almost certainly hasten the denomination of Iranian transactions with foreign suppliers in PRC yuan/renminbi and Russian rubles. And, with the prospect of Saudi Arabia also considering some denomination of oil sales in renminbi, the end of the total domination of the energy market in dollars — petrodollars — is looking increasingly likely after almost a half-century of total domination of the global economy by the U.S. dollar as the universal reserve currency. This is unlikely to negatively impact the U.S. in the short term, but it would strengthen the economies of the PRC and Russia, and gradually serve to see an erosion of the U.S. influence on global markets.

Related: Never Trust A Banker About Oil Prices

Meanwhile, although there is no immediate evidence that the Trump decision would necessarily lead to an uptick of conflict in the near-term in the Middle East, it is possible that it could allow Iran greater latitude in developing its strategic capabilities, including taking a more open stance on its nuclear weapons program.

Iranian President Hojjat ol-Eslam Hasan Fereidun Rouhani, however, said on May 8, 2018, in response to the Trump decision, that Iran would stay in the JCPOA with the other parties to the agreement. The question will be what meaning the JCPOA would have without the U.S. present and with the U.S. in a position to impose sanctions on Iran which would effectively penalize non-U.S. corporations if they attempted to do business with Iran, regardless of the fact that their domestic laws and their acceptance of the JCPOA permit such trade. The U.S., however, still has sufficient economic leverage to ensure that most major trading firms would not wish to jeopardize their ability to do business in the U.S. by continuing to trade with Iran.

The underlying reality of the entire process — both the JCPOA and the subsequent Trump repudiation of it — was that it did nothing in reality to constrain Iran from developing and deploying nuclear weapons.

Even without the Israeli-supplied intelligence which showed Iran’s historical commitment to development of nuclear weapons, it has been known since 1990 that Iran had acquired ex-Soviet nuclear weapons (from Kazakhstan stockpiles), then other nuclear weapons from Ukraine and the DPRK, and finally — working with the DPRK — developed and tested a nuclear weapon of its own design.

The JCPOA did not preclude ongoing development of Iranian ballistic missile delivery systems, and its national command authority (NCA) capabilities. These have consistently been developed and deployed. So the JCPOA did nothing to constrain that reality; it merely caused Iran to agree to curtail what had been a rapidly growing capability to create large quantities of fissile materials.

The Israeli Government of Prime Minister Binyamin Netanyahu and the Government of the Kingdom of Saudi Arabia welcomed the Trump decision to exit the JCPOA, but it is, in meaningful terms, uncertain what benefit the Trump action would have for those states. There is little doubt that the action ended a period of hypocrisy, given that it was largely a “deal for a deal’s sake”. But it did give Iran and its detractors the opportunity to end a period of mutual hostility which could have paved the way to a serious rapprochement.

It could have been an opportunity for the U.S. to seek influence again in Iran, something it has lacked since U.S. President Jimmy Carter deliberately undermined the Shah of Iran in 1978-79. The U.S. had the opportunity to offset some of Russia’s (and, to a degree, the PRC’s) influence in Iran by beginning a process to normalize U.S.-Iranian relations. It did not do this, and neither did the Iranian clerical Government take full advantage of the opening.

Arguably, a further catalyst was needed; one which the JCPOA failed to provide.

In the meantime, however, it is Russia, the PRC, and Turkey which will move quickly to fill the vacuum created by the new sanctions regime which the U.S. has introduced. And Saudi Arabia and the United Arab Emirates, in particular, will attempt to rebuild strategic credibility in the hope that Iran will be constrained by the sanctions to reduce its regional military and proxy warfare missions. But they risk seeing Iran, now absent the carrot of the opening to the U.S. and West, expand its projection, given that it now has less reason for constraint.

There is also little scope in the action for the U.S. to significantly improve its influence and position in the Middle East.

In the short-term, the only strategic advantage to any side is the removal of the hypocritical aspects of the JCPOA. It is possible that the move will force Turkey further toward cooperation with Iran, thereby hastening U.S. policy decisions as to how to deal with the fact that Turkey has become strategically hostile to the U.S. and NATO. Indeed, events are pushing together mutually suspicious players: Iran, Russia, and Turkey. But there is no opening in any of this for the U.S.

So the major motivations for President Trump’s move seem to include fulfilling a campaign promise to end the JCPOA, and introducing a new level of bargaining leverage in his upcoming talks with Kim Jung-Un.

President Rouhani said, in response to the Trump move, that the U.S. “has never adhered to its commitments”; and there is some justification for that comment, given the history that one U.S. administration will often contradict the commitments of predecessor administrations. But Trump has made it clear that he would stand by his own commitments. Iranian state television said that the U.S. President’s decision to withdraw from the JCPOA was “illegal, illegitimate, and undermines international agreements”. It may undermine international agreements, but there is no evidence that the withdrawal from the JCPOA was illegal. Still, it will make it more difficult for the U.S. to build future alliances or undertakings which rely heavily on mutual trust.

By Gregory R. Copley for Oilprice.com

More Top Reads From Oilprice.com:




Back to homepage

Trending Discussions


Leave a comment
  • Mamdouh G Salameh on May 09 2018 said:
    I would venture to suggest that real reason President Trump killed the Iran deal is to please Israel. The decision by President Trump to walk away from the Iran nuclear deal has the hallmark of having been made in Tel Aviv like the decision to recognize Jerusalem as the capital of Israel.

    Israel has been prodding the United States to attack Iran’s nuclear installations thus risking war with Iran. Israel which possessed an estimated 80 nuclear warheads in 2010 does not want Iran or any Arab country to acquire nuclear weapons as they would pose a threat to its security but it doesn’t mind if its own ownership of nuclear weapons poses a threat to others.

    Under the current uni-polar system, there is one law for Israel and another for the rest of the world particularly when it comes to Palestine and the Palestinians.

    Dr Mamdouh G Salameh
    International Oil Economist
    Visiting Professor of Energy Economics at ESCP Europe Business School, London
  • oneplot on May 09 2018 said:
    great analysis, best i've read so far. Very interesting power plays at both regional. national and international levels.
  • Tom on May 09 2018 said:
    Dr. Salameh, perhaps if all your neighbors surrounding you were threatening your life, you would possess nuclear weapons too!

    Someone once said to Abraham, "I will Bless those who bless you, and I will Curse those who curse you". Who said that?

    Oh ya, it was the Lord God Almighty, Maker of Heaven and Earth.

    Unless your bigger than Him, you better be careful how you treat Israel.
  • Les H on May 10 2018 said:
    Absent any proposed changes to the agreement, we're not given any idea why Trump chose to terminate the deal. Trump is committed to overturning any policies implemented during the previous administration. The US relationship with Iran has been hostile as they remain an obstacle to controlling the Middle East. We're left with political and geo-political rationale for the decision.

    I don't think there's any tie-in between the situations in Iran and N. Korea. N. Korea has generally been open to negotiations when South Korea has had a more friendly administration which favored conciliatory measures with the North. It remains to be seen whether any agreement will be faithfully upheld in the future since governments in the US and S. Korea are subject to change.
  • Douglas Houck on May 10 2018 said:
    I find it amazing that according to the author there is no real benefit to the US for walking from the JCPOA other than a campaign promise, as I see little influence of this action on the upcoming North Korean talks.

    At some point Trump's creation of chaos needs to generate something of value.
  • Nick on May 10 2018 said:
    Still don't understand how so many can keep referring to the Iran "deal" when it never went through the house or even congress as all treaties are required, to be constitutional. Plus it was never signed by Iran???? How is it a deal???
  • paul on May 11 2018 said:
    Trump has everyone but his extremely excited and empowered followers wondering about his next move - enjoy the show and stop pretending you have any idea of what you are talking about. Peace will overtake the world as the Obama/IRAN/EU alliance is exposed.

    Obama/Radicals Rule 1 and 2.

    Simply apply this filter to see the truth.

    Whoever smelt it dealt it, and whoever denied it, supplied it.
  • Ray on May 11 2018 said:
    Tom, according to King Solomon, son of King David of Israel's boast in The songs of Solomon, he says I am BLACK but comely, then the depictions of God both in the books of Daniel and Revelation reveals a God with skin of BURNT BRASS...ie, BLACK. Stop trying to superimpose white europeans upon BLACK history, which is what ask the white european nations are trying to do with their Ashkenazis.
  • dick on May 11 2018 said:
    follow the money please. trump isn't smart enough to set complicated policy and quite frankly neither are any of you, including the above Oil Economist. he effectively bans the sale of iran oil so the US can sell its oil and all other oil related deals. this is about whose oil will be bought and for how much. sounds like VPChanney struck again.
  • David Jones on May 12 2018 said:
    Iran is not North Korea. For all the rhetoric from the North, it's actually likely that this particular Kim wants to be part of the global community as he has displayed early internal leanings even before the nuclear fiasco. I doubt it is in any way easy to shift such a country as North Korea towards global integration even as an insider or in this case a 'God?'. This is not to excuse any atrocities committed by the regime but simply to mention that there were signs pointing towards a desire to change things internally. The nuclear threat in my opinion was a case of self preservation. They were and are probably still convinced that it could turn ugly for them without the weapons in reserve. We will see if that internal conflict can be resolved. Iran on the other hand probably consider themselves as a peer or above their neighbors in every way and has experience 'interacting' directly with them. I hardly think it's likely that they will respond well if this president is intending to squeeze them into a modified deal by ripping up the current one and providing a period of time before enacting actual meaningful procedures with the idea of establishing leverage for a future deal. To me, many of these actions look like a constant game of chicken, one commonly done in the 50s with cars. Sooner or later, all participants either end up in a hospital or a morgue.
  • NICK on May 12 2018 said:
    In response to Dr Salameh above;
    I suggest there is indeed one law for Israel and another for Muslim nations in the region. The law is that israel is bad/unjust, while Muslim nations are good/just. This is a lie. Dr Salameh complains about Israel possessing nuclear capabilities unfairly. But they have only ever been been defensive, never offensive, for the simple reason that Muslims have been hating and slaughtering Jews for centuries, and not the reverse. Muslims have violently colonised and oppressed others, not Jews. It is the Islamic dictatorship of Iran, secretly continuing to develop nuclear missiles, and with the frequently and openly declared objective of destroying Israel (and the USA as the 'Great Satan') , that obviously hates and threatens war. Dr Salameh simply continues (albeit politely) the ancient tradition of Islamic supremacism against Israel, as does the anti-Semitic UN. Only Trump has had the vision to see through the façade and the courage to support the only light of civilisation, freedom, democracy and human rights in the Middle East
  • Kelly Clover on May 12 2018 said:
    The circumstances under which Trump is dropping out of the Iran deal are very bad. The USA would be much better off if we could say that Iran cheated and we can prove it. But we can't prove that they cheated.
    If our inability to prove cheating is the result of the agreement not providing adequate and reliable means to inspect and verify, Trump should say so publicly. Just dropping out period is bad for us in the eyes of world opinion. Whether you agree with Obama's decision to make the agreement or not, we can't change the past. Foreign countries expect us to keep past agreements. It looks very bad for us to toss agreements aside when a new president is elected and he favors policies which are quite different from a previous one.
  • julian mellows on May 14 2018 said:
    You say "the real reason" as if trump has any coherent rationale. I doubt that. Much more likely he was responding to what his old friend bibi wanted. Plus Trump's infantile desire to undo anything at all with Obama's name on it. It's called retaliation. We all do retaliation sometimes. It's just that we should not expect to vote someone in as president who is ruled by it.
  • Joan on May 15 2018 said:
    If Israel did not have nucs, they would not be around. I think everyone truly gets that, regardless of the rhetoric. So lets move past that one. They have never had an intention to use them, other than defensively. They try in their very very imperfect way in a very very imperfect situation to be civilized and democratic. It works in some ways and not others. No one has the answers to their epic struggles and hard decisions, and I wish we did.

    On the other hand, other countries in the region have no modern history of democracy except the flawed one in Iran. Consider that Iran believes it is democratic and it kind of is just like they kind of are not developing nucs. The agreement seemed a bit like their version of democracy, pretty flawed and ultimately not really what it appears to be. I have never really agreed with trump on anything except this. A wiser man might have had a more obvious plan or a strategy, but maybe not. Acting like the agreement was a real thing is not something to continue, for the safety of the world. Acting like democracy is Irans goal is their internal issue to solve.
  • Rob on May 15 2018 said:
    Nick

    - The international community considers the establishment of Israeli settlements in the Israeli-occupied territories illegal under international law, because the Fourth Geneva Convention of 1949 prohibits countries from moving population into territories occupied in a war.

    - Numerous UN resolutions have stated that the building and existence of Israeli settlements in the West Bank, East Jerusalem and the Golan Heights are a violation of international law, including UN Security Council resolutions in 1979, 1980,[10][11][12] and 2016.[13][14] UN Security Council Resolution 446 refers to the Fourth Geneva Convention as the applicable international legal instrument, and calls upon Israel to desist from transferring its own population into the territories or changing their demographic makeup.

    You stated that Israel's nuclear arsenal is strictly for defensive purposes. The above summarizes why Israel may have to take a defensive posture. Don't try and make it sound like Israel is a cordial neighbor, not the case.
  • Ramon A on May 16 2018 said:
    Israel have nukes....the Arabs have chemical wpns...so that each can retaliate against whoever uses their wpn first...that was before ...and if the past months bombing did in fact hit the targeted chemical wpns...
  • Kave on May 16 2018 said:
    I,m from iran and the real manner is regym change because trump want to help iranian people to get rid of this regym.we thanks mr trump to leave this deal.
  • JonathanPollardSpy on June 06 2018 said:
    Tom, Israel had better be careful too, because there is a limit to what God can tolerate from it. Isaiah 5:25 and Amos 2:4-5.

Leave a comment




Oilprice - The No. 1 Source for Oil & Energy News