Iran's push into Iraq linked to plunging oil prices. Iran warns Gulf states: stop aid to Iraq, stop flooding oil market
Arab states in the Persian Gulf believe Iran is trying to threaten them not only to halt their support of Iraq in the Iran-Iraq war, but also to change their oil policies. Iran's seizure of the Iraqi port of Faw and areas near Kuwait's border, as well as recent statements by Iranian leaders, have led the Gulf states to this conclusion.
The powerful speaker of Iran's parliament, Hashemi Rafsanjani, warned Gulf countries that ``Iran will no longer accept that your ports should receive arms shipments bound for Iraq . . . and that Iraqi oil pipelines should pass across your territory.''
Iran has indicated an even broader connection between its latest military offensives and the oil situation. Prime Minister Hossein Musavi said Iran's new attack in the Kurdistan area last week aimed to threaten Iraq's northern oilfields near Kirkuk and ``counter the oil conspiracy'' as part of Iran's fight to lower the oil production of Arab Gulf states and raise world oil prices.
Iran's concern over Iraq's ability to continue earning oil revenues may stem from the drastic strapping its own oil sales have taken in recent months. Oil from Iraq's southern oilfields is pumped across Saudi Arabia to the port of Yanbu, through a pipeline opened after the war began in September 1980. Kuwait and Saudi Arabia sell some 300,000 barrels of a day on Iraq's behalf.
Oil-industry specialists calculate that Iran's net oil earnings now run at only about $420 million a month, compared with some $1.3 billion late last year -- a fall of nearly one-third. Iran's sales have dropped in both volume and price. Tehran's ability to buy arms and keep the war going depends largely on keeping up its oil earnings.
The slump is partly a result of the oil price war and partly because of Iraq's effort to disrupt Iranian oil exports by attacking installations and tankers. That campaign has been reinvigorated, and Iraqi jets last week hit four supertankers of the estimated seven that shuttle between Iran's main Kharg Island terminal and a temporary facility further south at Sirri Island.
Iran, in turn, attacked two vessels on the Arab side, operating from Saudi terminals. Yesterday, Iran said its forces killed 400 Iraqis in an overnight attack near Faw. Iran also reportedly attacked a Cypriot tanker in the Gulf, killing one crewman. Iraqi claims that they had overrun Iranian positions near Faw and recaptured areas in Kurdistan conflicted with Iran's statements.
Both Iran and its ally Libya blame the Saudis and Gulf states for triggering the oil price war by abandoning output quotas and flooding the market with cut-price oil.
Since Iran's new offensive began Feb. 9, Libya has been coordinating closely with Tehran on both political and oil matters. In a recent interview with a Libyan-financed Beirut magazine, Col. Muammar Qaddafi said the Iranian attack was triggered by the oil situation. He warned that ``the war will be escalated and expanded to include all the oil countries of the region if the Gulf oil states do not stop their price and output war.''
Despite the stalemate in the battle for control of Faw, the Arab states feel threatened as never before. The military chiefs of the six-member Gulf Cooperation Council (GCC) met Wednesday to ``coordinate defense strategies against a possible spread of the war.'' The officials refused to confirm or deny a Kuwaiti newspaper report that a 10,000-strong Saudi-based rapid deployment force was moving toward the Kuwaiti border.
This meeting followed Monday's session of GCC foreign ministers, which strongly condemned Iran, called on it to withdraw to the border, and expressed full support for Iraq. This was a far cry from the GCC's November summit, when the Gulf leaders appeared to distance themselves from Iraq somewhat and make overtures to Tehran. This led to talk of a ``GCC initiative'' aimed at cultivating better relations with Iran, in the hope of inducing Iran to moderate its terms for peace with Iraq.
But this has clearly gone by the board, with the GCC states rallying strongly behind Iraq and making it clear they do not intend to buckle to Iranian threats.