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Get Ready for More Mischief From Iran
An energy expert warns that Tehran will find new ways and locations to strike asymmetrically, maybe even in the Red Sea and the Bab el-Mandeb strait.
After Iran launched a bloodless retaliatory strike early Wednesday on two Iraqi bases housing U.S. troops, U.S. President Donald Trump appeared to seize the opportunity to de-escalate the military confrontation between the two countries. “The United States is ready to embrace peace,” he said in a White House address on Wednesday.
But if military retaliation appears off the table for now, Trump dialed up the heat diplomatically, promising additional economic sanctions on Iran in the wake of the missile strike and calling on European countries to walk away from the tottering 2015 nuclear pact, which Tehran is breaching bit by bit.
Foreign Policy spoke with Matthew Reed, the vice president at Foreign Reports, an energy consultancy focused on the Middle East, about the ongoing risks to the region’s energy infrastructure from Iran’s use of asymmetric attacks to push back against U.S. economic pressure and last week’s assassination of Iranian military commander Qassem Suleimani.
Foreign Policy: Despite the signs of de-escalation, there are also indications that Iran’s not done yet. The supreme leader spoke of further actions, and there’s still talk in Revolutionary Guard circles of more asymmetric attacks. Do you expect Iran to go back to its summer and fall playbook and go after regional energy infrastructure?
Matthew Reed: For as long as Trump is committed to his maximum pressure policy, the threat of these potshots and harassment tactics will remain. They might not act out immediately, but that playbook has been successful up to now, and their options are limited.
FP: Just this morning, there was a lot of alarm over the Strait of Hormuz, with some tanker companies halting transits, and concerns that Iran might be ready to close one of the world’s key oil chokepoints. Is closing Hormuz still an option for Iran, or is that a step too far?
MR: I think now more than ever the Iranians are looking to be creative and cause mayhem in new ways and in new places. If you look at what they are actually saying internally, and we’re talking about Iranian military officials talking to Iranian media, what they are talking about is Iran’s reach. When the Iranians talk about the geography of resistance, they are talking about being able to hit many targets and not necessarily directly. The Strait of Hormuz is so sensitive that if the Iranians attacked it head-on, or launched missiles from the coast at ships, it would trigger an open conflict with the United States.
FP: Which is what they seem determined to avoid.
MR: But they have other options. They have fired precision missiles at pipelines. I don’t think at this stage that they are ready to do something as big and bold as Abqaiq, when they attacked two of the biggest and most important oil facilities in Saudi Arabia. Doing that now would be begging Trump to hit back hard. But they could hit pipelines, they could resort to sabotage as they did with the tankers last May and June, and beyond that, what they might be more inclined to do now is to hit new targets in new places. And that’s why I think the Red Sea and the Bab el-Mandeb strait are underappreciated as potential risks.
FP: When you talk about Bab el-Mandeb, what would that mean? Iran using Houthi proxies in Yemen to disrupt shipping?
MR: Yeah, they’ve used the Houthis before to attack ships in that area, and they could do it again.
FP: And that wouldn’t draw a disproportionate response from Trump?
MR: I think right now it depends on scale. And so far, the only red line Trump has demonstrated that he will defend is American lives. The reason Trump didn’t hit the Iranians harder over the summer is the fact that even if the campaign of Iranian disruptions made headlines, it still caused minimal disruption. It scared people, but it did not disrupt oil supplies.
FP: But what is Iran’s objective in attacking these targets if hitting Abqaiq barely moved the oil market and if the recent missile attacks hardly nudged the oil price? What is it trying to get out of these attacks?
MR: The simplest explanation is that they want the United States to know that they can hit back, and they want U.S. allies to know that they are more vulnerable than they think. The Gulf states have to be on guard for more Iranian attacks. When it comes to Iran’s threats to attacks on those countries, what they are doing is mirroring what the United States says about Iran’s proxies. Trump says that he will not distinguish between Iran’s proxies and Iran, and what Iran is saying now is that no one is safe if they enable American attacks on Iran.
FP: Looking back over the past six months, from the tanker sabotage to the attack on Saudi Arabia to the missile attacks—is the risk premium in the oil market a relic of the past? Are we so awash in oil that these things can no longer move the market, or could you see some sequence of events that brings us back to triple-digit oil prices?
MR: I don’t know about triple digits, but the fact is, if the Saudis had proved less resilient in September, this would be a completely different ballgame. It’s my opinion that we were closer to war in September than we are now. The risk premium is definitely not a thing of the past—it’s just that, at this moment, we have enough oil sloshing around. Six months from now, this story might be very different.
FP: In terms of regional energy risk, there seems to be one from an unexpected direction, which is Iraq. The Iraqi parliament has already voted to expel U.S. troops, and Trump has threatened to slap sanctions on Iraq. Can you see the United States levying sanctions on Iraqi oil production?
MR: No, we’re not at that point yet. If you translate what Trump is getting at, what he is essentially saying is that the Iraq War was a bad investment from the start, and he is prepared to send the Iraqis a bill for it. It’s posturing—until proved otherwise.
FP: But is there a threat from a different direction, in the event of a U.S. troop withdrawal? Could a reconstituted Islamic State pose a threat to Iraqi oil production?
MR: Even at its strongest, the Islamic State didn’t pose a grave threat to Iraqi production because the bulk of that production is in the south, in the Shiite heartland. Rewind to 2015, and the Islamic State had a lot more success attacking pipelines, but they didn’t take off that many barrels. The fields that they captured in Iraq were not very large, and the crude quality was not very good. In Syria, the story’s different.
FP: Could a revitalized Islamic State go back to the days of its oil-rich caliphate?
MR: Rebuild their oil empire? Absolutely not.