Facing crude oil prices below $19 a barrel, Iran is very likely to cause an incident in or around the Persian Gulf.
Iran’s rationale here will be simple. The regime is facing a coronavirus outbreak of truly catastrophic scale, with many thousands dead. At the same time, U.S. sanctions have crippled the Iranian oil export market. That market being critical to Iran’s foreign capital generation, it can no longer provide for its domestic security agenda and public health needs.
Adding to Ayatollah Ali Khamenei’s challenge is the U.S. refusal to provide general sanctions relief for the duration of the pandemic. Washington’s credible concern is that generalized relief would strengthen the regime without any associated ballistic missile and nuclear weapons disarmament. President Trump is thus sticking by his offer of a new nuclear deal that offers sanctions relief with action on those two issues. That’s an offer the regime will ultimately have to accept or face an ever more credible threat of internal collapse.
But where does this leave Iran now?
Well, Iranian President Hassan Rouhani and Foreign Minister Javad Zarif are begging the United States to remove sanctions. But the hard-liner inner circle is entertaining a different approach. Coupled with recent escalations against the U.S. military in Iraq, the Islamic Revolutionary Guard Corps last week temporarily seized a vessel in the Gulf of Oman and harassed U.S. warships in the Persian Gulf. The intent here was twofold. First, to cause a spike in oil prices in fear of a disruption to supply. Second, to influence the White House’s fear of Iran’s taking further destabilizing action absent sanctions relief.
It hasn’t worked. Oil prices have shifted downward, and the U.S. has refused to give Iran the escalation it desires.
Of course, the challenge now is that Iran will pursue additional escalations. This might entail new attacks on U.S. forces in Iraq but is likely to involve efforts more specifically designed to drive up oil prices. So, for example, we might see a new attack on Saudi oil fields or the IRGC’s seizure of tankers transiting the Persian Gulf. It is also possible, though far riskier for Iran, that the IRGC might actually attack a U.S. warship in the Gulf, perhaps if only to see that warship fire on its own forces and thus drive up oil prices alongside international concerns of a broader conflict. The U.S. cannot mitigate the threat entirely here. If an IRGC speedboat does a run at a U.S. warship, concerns over a suicide attack will require the commander to fire on the threat.
We’ll just have to wait and see. But the top line is clear: We should expect new Iranian escalation in the near future. The regime needs oil prices to go back up or generalized sanctions relief. And, in Tehran’s present condition of crisis, it will take great risks to achieve its objectives.
