Large-scale military operations in Gulf would lead to significant fall of oil production

Oil&Gas Materials 9 January 2020 15:13 (UTC +04:00)
Large-scale military operations in Gulf would lead to significant fall of oil production

BAKU, Azerbaijan, Jan. 9

By Leman Zeynalova - Trend:

Large-scale military operations in Gulf would lead to significant fall of oil production, Francis Perrin, Senior Fellow at the Policy Center for the New South (PCNS, Rabat) and at the French Institute for International and Strategic Affairs (IRIS, Paris), told Trend.

He pointed out that Iran’s attack in Iraq is not a big surprise.

“It would have been very difficult for the Iranian authorities to do nothing because a no reaction would have been considered as a great weakness. The surprise is rather in the fact that Tehran’s reaction was very rapid and direct (missiles coming from Iran and not from forces supported by Iran in Iraq, Yemen, Syria or Lebanon),” said the expert.

Perrin believes that the two key issues now are: will Iran prepare and execute, directly or indirectly, other attacks on the US military and/or US persons? And will President Trump decide or not to retaliate to the attack of today in Iraq?

“For Donald Trump there is a clear red line, which is the loss of American lives, as shown by the US military strikes on Kataeb Hezbollah in Iraq and in Syria at the end of December and the killing of Major General Qassem Soleimani. According to US and Iraqi sources Iranian strikes did not generate any deaths. Iran says it does not seek war, the US authorities say they do not seek war and Iraq and other countries in the region, European countries, Russia and China are calling for de-escalation,” said the expert.

He pointed out that after a strong reaction last Friday with a rise of about 3.5 percent of the price of North Sea Brent following the killing of Qassem Soleimani oil markets were more or less stable on Tuesday.

“On 8 January Brent prices for March contracts fell in London from about $70.80 per barrel at the beginning of the day after the Iranian strike to about $68/b in the afternoon. Traders mostly think that the geopolitical tensions between the US and Iran could be a little less difficult in the coming days. This is a likely scenario but the key assumptions here are that Iran will stop its attacks and that the US will not retaliate. But we have absolutely no guarantee that these assumptions will be confirmed. Messages coming from Iran can be contradictory: the Supreme Leader of the Islamic Republic of Iran, Ali Khamenei, said that the attack of today was ‘’a slap on the face’’ of the US but ‘’not enough’’. His demand is that US troops leave the region, which is of course totally unacceptable for Washington. The Iranian Foreign Minister wrote that ‘’we do not seek escalation or war, but will defend ourselves against any aggression’’,” said Perrin.

He said OPEC Secretary General rightly stressed that Iraq’s oil facilities have not been damaged, as the Iranian strike targeted military bases, and that this country’s production and exports have not been disturbed. “The oil operations in other Arab Gulf countries are going on without any problems as of now. The main threat would be large-scale military operations in the Gulf region which would lead to a significant fall of oil production and exports through attacks on oil facilities (oil fields, processing plants, refineries, pipelines) and on tankers in the Gulf. The Middle East covers about a third of world oil production and about 35 percent of world oil exports.”

Iran’s Islamic Revolutionary Guard Corps (IRGC) used Fateh-313 ballistic missiles in attack on Iraq’s Ayn al-Asad Air Base. These missiles were fired from Iran’s Kermanshah province (430 kilometers) because of its proximity to the military base. The missiles have a range of 500 kilometers. Previous reports said that at least 80 US servicemen were killed in an attack on Iraq’s Ayn al-Asad Air Base by the Islamic Revolutionary Guard Corps (IRGC). About 200 people were injured.

Ayn al-Asad Air Base was a strategic spot for the US and delivered support to drones from that base, the IRGC representative said. Fifteen missiles were fired at 20 sensitive locations, Numerous drones and helicopters were destroyed.


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