Russia, Iran, And War For Oil?

iran-warship

One day after lifting part of an Obama administration sanction directed against the Russian intelligence service (FSB), the new administration announced today economic sanctions on Iran. Today’s announcement of economic sanction on Iran clarifies yesterday’s bizarre statement from national security advisor, Michael Flynn, putting Iran on notice. Russia, of course, has become the leading supplier of weapons to Iran. The backstory behind this event includes the Senate confirmation and the swearing in of former ExxonMobil CEO, Rex Tillerson, as our new Secretary of State.

The new administration has adjusted a sanction imposed in December by the Obama administration on the FSB  in response to the alleged Russian hacking into the 2016 elections. Yesterday the Treasury Department announced that:

“It would allow U.S. companies to make limited transactions with FSB that are needed to gain approval to import information technology products into Russia.”

A Treasury Department spokesperson called the changes exceptions in response to complaints,

“From companies that were unable to import many consumer technology products without a permit from the FSB.”

While it does appear that the adjustment was necessary so as to allow US made consumer technology exports into Russia, the speculation is that more important sanctions against Russia will be lifted in the days and weeks to come. At the same time, the administration has just announced new economic sanctions on Iran suggesting the imposition of additional future sanctions.

Showing favoritism towards Russia, while provoking other geo-political adversaries of the United States, seems to have been authorized by the Republican controlled Senate through the confirmation of Secretary of State Tillerson. ExxonMobil makes no secret of the fact that the company has extensive interests in Russia which will grow if and when existing United States sanctions are lifted.

“Exxon holds a 33 percent stake in Arctic Kara Sea and Black Sea joint ventures, and a 30 percent stake in the Sakhalin project.”

Those projects with the Russian State controlled oil and gas industry were halted by Obama Administration sanctions imposed in 2014 in response to Russia’s aggression in the Ukraine and the Crimean Peninsula. Secretary Tillerson, a critic of the sanctions that halted ExxonMobil’s Russian operations, was awarded Russia’s Medal of Friendship by Vladmir Putin for the deals he brokered between ExxonMobil and Rosneft, the Russian State oil company, from 1999 through 2013.

We also know that Secretary Tillerson is to receive a $180 million retirement package from ExxonMobil which includes specified prices for giving up shares of stock he was scheduled to receive over the next ten years. The Secretary has also agreed to sell over 600,000 shares of stock he already owns in ExxonMobil at a price set early in January, 2017.

World gas and oil prices have spiked since the 2016 elections. Market watchers predicted that this trend will continue. Russia has joined Saudi Arabia, OPEC, and other non-OPEC oil producing countries, such as Mexico, to cut oil production by some 1.8 million barrels per day. The candidate, now the President, has long threatened to withdraw the United States from the Obama administration’s deal that stopped Iran from producing weapons grade nuclear material. Now comes the saber rattling by both Iran and by the new administration, which can only send world energy prices higher should Iran attempt to close the Straits of Hormuz, as it has threatened to do, whenever tension have risen with the West.

The new President seems to enjoy talking tough, and it appears that this tough talk is directed against everyone other than the Russians. Recall his recent address to the CIA where it was implied that the United States might get a second chance at taking Iraqi oil.  Iran pushed back against the new administration with a failed test firing of a medium range ballistic missile. With the tensions ratcheting up between the United States and Iran, a dangerous game of chess appears to be on the table.

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