• Source: "Kettle of hawks"  

    Iran nuclear deal is called the JCPOA (Joint Comprehensive Plan of Action). It was signed by Russia, China, Iran, the US and the "E3" (Germany, France, the UK). From the article "The Iran deal was designed as a pragmatic arms-control agreement that cuts off Iran’s route to a nuclear weapon for a period of time. But its opponents have always wanted it to do far more. Some wish it would also check Iran’s prolific meddling across the Middle East. Iran backs Shia militias in Syria and Iraq, stokes the war in Yemen and supports Hizbullah—a Lebanese Shia militia that threatens Israel with thousands of missiles and occasionally fires them. For the accord’s critics, Iran is a “bad actor” to be isolated, not engaged....even on its own terms, as an arms-control pact, the Iran deal falls short. It allows for unprecedented levels of inspection, but critics say that it still allows the Iranians to keep anything they classify as a military site off-limits to inspectors. This is not strictly true—an admittedly slow and cumbersome procedure allows access to such sites if evidence emerges of their being used nefariously."

    Bolton's attitude (from the article): "A few months before the deal was signed in July 2015, Mr Bolton boomed: “The inconvenient truth is that only military action…can accomplish what is required.” Air strikes on Iran’s nuclear facilities, he argued, could set the program back by “three to five years”. In an article this year Mr Bolton struck a less bellicose note, claiming that the reactivation of nuclear-related sanctions, plus some new ones, could bring the “seemingly impregnable authoritarian” Iranian regime to its knees. America’s declared policy, he argued, should be to end Iran’s Islamic revolution before its 40th birthday in 2019. But it is unlikely that sanctions, combined with unspecified “material” support for Iranian opposition groups, could bring about regime change, and unclear whether Mr Bolton really believes that they could. About North Korea, he is equally blunt. In August Mr Bolton called talking to the hereditary Marxist dictatorship “worse than a mere waste of time”. If China would not agree to work with America to dismantle Kim Jong Un’s regime (an implausible scenario), the only alternative was “to strike those [nuclear] capabilities preemptively”. In this view, if the proposed summit between Mr Trump and Mr Kim takes place, it may be no more than the prelude to an ultimatum and perhaps even to war."


  • Source - Economist, Nov 03, 2018: "America turns the screws on Iran"     

    Trump pulled the US out of JCPOA and now sanctions are reimposed upon Iran and Iranian oil. But how will hurting Iran persuade them to change?

    “Ghost” oil tankers (ship that have turned off their transponders) are making trips between China and Kharg Island, Iran’s refilling station. These ships are evading the sanctions placed on Iran by America. In 2015, Iran entered into a deal with the US and EU in which they agreed to stop nuclear weapon research in exchange for a lifting of sanctions. Trump pulled the US out of he deal and reimposed sanctions on Iranian oil beginning this November. The last time America did this, Iran’s exports tumbled from 2.5m barrels per day (bpd) in 2011 to 1.1m bpd three years later. No one knows how far they will fall this time. They have already dropped by about a third since their peak in April of 2.8m bpd. South Korea and Japan stopped buying Iranian oil. India reduced its imports. China is harder to gauge, in part because vessels like the ghost tankers hide themselves. By year’s end, though, Iranian oil sales will be at least 1m bpd below their peak. Oil accounts for almost 70% of its exports and half of government revenue. The economy is already weak. Inflation climbed to 15.9% last month. 

    Trump will not drive Iran’s oil exports down to zero, as he hopes. But he will inflict pain. The question is what he hopes to achieve; sanctions are a tool, not a strategy. Barack Obama made clear that he wanted a nuclear deal. Critics argue that his focus was too narrow. Mr Trump has the opposite problem. His secretary of state, Mike Pompeo, has a wishlist for any future agreement. It asks Iran not only to halt its nuclear program, but also to stop testing ballistic missiles, withdraw its troops from Syria and abandon regional proxies, such as Lebanon’s Hizbullah. Taken together this amounts to asking Iran to change its entire security doctrine of backing Shia militias. The Islamic Republic has maintained that posture despite decades of economic pain. It has little incentive to compromise with a president it sees as bent on regime change.

  • Source: "Donald vs OPEC"  

    Trump faces as "iron triangle" on oil prices in that he has three policy goals that are mutually exclusive. First, he wants cheap gas for the midterms (currently crude is $77 a barrel and gas is approaching or exceeding $3 a gallon). Supplies are tight despite recent increases in production from Saudi Arabia and Russia, mainly due to instability in Libya and Venezuela. Next, Trump wants to punish Iran by forcing American allies to stop importing Iranian oil by November 4th or face sanctions. This will impact about a billion barrels a day with the main squeeze coming in September. Finally, there is the developing US-China trade war. One option the Chinese have warned they will use will be to put tariffs on American oil imports. Some analysts predict that Trump would release oil from the SPR (Strategic Petroleum Reserve) to flood the market and bring down prices. "That would be tantamount to launching a trade war against OPEC and Russia." And whither shale? They simply can't respond quickly enough to changing price signals and thus are not a factor. 

    Also of interest from the same issue: "Egypt is optimistic" Egypt will soon be a net exporter of gas thanks to massive discoveries in the Mediterranean off the coast of Sinai. The  Zohr field in 2015, now the Noor field last year. From the article: "Mediterranean gas will have no shortage of buyers. Demand is soaring in developing countries. Consumption in China alone grew by 15% last year. But it would be particularly attractive to Europe, which depends on Russian gas. European imports from Russia hit a record high in 2017. Former Soviet states fear this gives Vladimir Putin, the president of Russia, leverage over them. His country has cut off supplies in the past. Egypt and its neighbors could help Europe diversify its suppliers."