Trump's unenforceable red line with Iran

US President Donald Trump’s handling of Iran once again exposes a familiar pattern: aggressive rhetoric followed by strategic hesitation. By publicly assuring Iranian protesters that “help is coming,” Trump drew a red line that was emotionally charged but strategically hollow. As events unfold, it is becoming evident that this red line is unenforceable—not because of a lack of military power, but because of the absence of political clarity and regional consensus.

Having openly aligned himself with anti-government demonstrators, Trump boxed his administration into a dilemma. Either act militarily and risk a wider regional conflagration, or step back and invite accusations of weakness. Analysts rightly argue that this corner was self-created. Grand declarations, made without an executable plan, rarely translate into sustainable policy—especially in a region as volatile as the Middle East.

While the White House insists that “all options remain on the table,” reality suggests otherwise. The dispatch of the USS Abraham Lincoln carrier strike group is more symbolic than operational in the immediate term. By the Pentagon’s own assessments, the United States is not positioned for a sustained campaign against Iran anytime soon. Military capability, though abundant, does not automatically equate to political will or strategic wisdom.

More telling is the diplomatic activity behind the scenes. Key regional allies—Saudi Arabia, Qatar, and Oman—are reportedly urging restraint, fully aware that a strike on Iran could ignite a multinational conflict with unpredictable consequences. Even Israel, often portrayed as hawkish, appears cautious about escalation without a clear endgame. Trump’s assertion that he “convinced himself” to pause action only reinforces the perception of impulsive decision-making rather than coordinated strategy.

Crucially, Middle East experts remain skeptical that limited military strikes would achieve Washington’s stated objective of regime change. Iran’s clerical establishment has historically thrived under external pressure, using sanctions and threats to consolidate internal control. Economic hardship has not fractured the regime; it has hardened it.

In the final analysis, Trump’s Iran policy reflects a dangerous imbalance—maximum rhetoric paired with minimum foresight. Red lines that cannot be enforced weaken credibility, embolden adversaries, and unsettle allies. In geopolitics, restraint backed by strategy is strength; noise without direction is not.

Gulf states warn Trump against sending help to Iranian protesters

Arab Gulf states have been warning the Trump administration not to strike Iran after Trump and White House officials stated on Tuesday that military action was more likely than not, according to a Wall Street Journal (WSJ) report. According to the WSJ, Iran's rival Gulf states have largely avoided addressing the protests that have spread across Iran since late December, leaving thousands dead.

Saudi Arabia, Oman, and Qatar informed the White House that even attempting to overthrow the current Iranian regime would destabilize the global oil market and ultimately hurt the American economy, according to WSJ.

A White House official told the WSJ that Trump was unlikely to heed these warnings outright, saying, “the President listens to a host of opinions on any given issue, but ultimately makes the decision he feels is best."

Earlier on Tuesday, Trump said that "help is on its way" to Iran and asked Iranians to keep protesting against the Islamic Republic regime.

"Iranian Patriots, keep protesting - take over your institutions! Save the names of the killers and abusers. They will pay a big price," Trump shared on Truth Social. "I have cancelled all meetings with Iranian Officials until the senseless killing of protesters stops. Help is on its way. MIGA!" he assured.

Trump's comments come as he is expected to convene senior administration officials on Tuesday to discuss possible courses of action regarding Iran. The meeting will be "significant," several US officials told The Jerusalem Post.

Around 3,000 people have been killed in Iran amid the ongoing protests, an Iranian official told The New York Times on Tuesday.

An additional source, speaking to Reuters, blamed “terrorists” for the deaths of civilians and security personnel.

In addition, UN human rights chief Volker Türk said on Tuesday that he was “horrified” by mounting violence by Iran’s security forces against peaceful protesters.

Meanwhile, sources have told The Jerusalem Post that in the western Iranian provinces of West Azerbaijan, Kurdistan, Kermanshah, and Ilam, entrances to many cities have been blocked, and numerous checkpoints have been set up.

According to the sources, Islamic Revolutionary Guard Corps security forces are stopping vehicles, searching them, and, in some cases, forcing citizens to unlock their mobile phones.

With the complete shutdown of the internet and telephone services, the only means of accessing news and information for many Iranians is currently satellite television, which is subject to heavy jamming in most cities. There have also been reports of security officials house-checking in cities such as Tehran and confiscating civilians’ satellite dishes.

The protests, which began on December 28, 2025 continue despite the communications restrictions and rising casualties.

 

Iran: Myth of Regime Engineering

Nearly half a century after the 1979 Islamic Revolution, one uncomfortable truth remains intact- the United States has failed to toppling Iran’s clergy-dominated political system. From covert operations to overt pressure, from sanctions to sabotage, Washington’s arsenal has been vast—but its outcomes limited. This reality challenges a deeply entrenched belief in Western policymaking circles that sustained external pressure can reengineer sovereign political systems.

The US–Iran confrontation began with high drama. The failed 1980 rescue mission to free American embassy staff in Tehran was an early signal that Iran would not bend easily. Since then, the playbook has expanded—economic sanctions, diplomatic isolation, cyber warfare, targeted killings, and strikes on strategic installations. Each tactic was presented as decisive; none proved so. Even with Israel’s fullest political, intelligence, and military backing, the objective of dismantling Iran’s clerical power structure remains unmet.

Washington’s current emphasis on internal unrest follows a familiar pattern. Protests in Iran—whether driven by economic hardship, social restrictions, or political frustration—are quickly framed as precursors to regime collapse. Yet history offers little evidence that externally encouraged demonstrations can dismantle a deeply entrenched ideological state. On the contrary, such pressure often consolidates power by allowing the ruling elite to externalize blame and tighten internal control.

The comparison—explicit or implied—with Venezuela is particularly flawed. The assumption that methods used against Caracas can be replicated in Tehran ignores fundamental differences. Iran is not an oil-dependent, institutionally hollow state with fractured elite consensus. It possesses ideological cohesion, parallel power structures, and decades of experience in surviving siege conditions. The belief that eliminating a leadership figure—or fueling street unrest—can unravel this system reflects strategic illusion rather than informed assessment.

That said, dismissing Iran’s internal weaknesses would be equally misleading. Economic mismanagement, corruption allegations, demographic pressure, and social discontent are real and persistent. Sanctions have undeniably deepened hardship, but domestic policy failures have magnified their impact. Iran’s ruling establishment has often responded to dissent with rigidity rather than reform, narrowing its own margin for legitimacy. These internal contradictions—not foreign intervention—pose the most credible long-term challenge to clerical dominance.

The paradox is stark - US pressure has hurt Iranian society more than it has weakened the state, while simultaneously validating the regime’s narrative of perpetual external threat. Each failed attempt at coercion reinforces Tehran’s claim that resistance, not accommodation, ensures survival.

The lesson from five decades of confrontation is neither ideological nor moral—it is strategic. Regimes are rarely dismantled from the outside, especially those forged in revolution and sustained through resistance. Iran’s future will be shaped primarily by its own political evolution, not by foreign-engineered upheaval. Any policy that ignores this reality is destined to repeat past failures—at great human and geopolitical cost.

 

Trump will kill Khamenei if Iranian regime continues murdering protesters

As headlines from The Jerusalem Post scream warnings of extreme US retaliation — including provocative assertions that Donald Trump might kill Ayatollah Khamenei should Tehran continue its violent suppression of protesters — it is easy to dismiss such rhetoric as hawkish posturing. Yet these headlines reflect a deeper strategic shift in US foreign policy that vindicates concerns I outlined in recent blogs that Washington’s punitive sanctions and coercive diplomacy have crafted the miseries inside Iran, and could now be laying the groundwork for external confrontation rather than domestic reform.

Iran is convulsed by one of its largest protest movements in years, driven not by some abstract ideological rebellion, but by grinding economic hardship — a direct consequence of tightening sanctions and economic isolation that have decimated ordinary livelihoods. These sanctions are widely opposed by international human rights actors because they disproportionately punish the populace rather than the political elite, exacerbating inflation and scarcity while eroding the state’s capacity to address domestic grievances.

Into this tinderbox enters a U.S. administration increasingly willing to ‘lock and load’ at the first sign of violent repression. Statements from US officials threatening lethal force against Iranian leadership if protests continue to be crushed are not isolated soundbites — they are symptomatic of a broader policy framework that conflates authoritarian repression with existential threat. The arrest of Venezuela’s president and the subdued global response appear to have emboldened hardliners in Washington who now see regime decapitation as a plausible extension of coercive diplomacy.

This is not to romanticize theocratic rule in Tehran. But conflating internal unrest rooted in economic despair with a casus belli against the Iranian state risks legitimizing harsher US interventions that increasingly look directed not at human rights but at regime change itself. The deeper injustice lies not just in Iran’s domestic repression, but in the US foreign policy calculus that has, through sanctions and threat of force, nurtured the very suffering it now claims to oppose.

Iran proposes meeting with Europeans

Iran has proposed meeting the European parties to a 2015 nuclear deal possibly in Rome this Friday if talks resume with the United States, reports Reuters.

Iran is looking to build on the momentum of nuclear negotiations with the United States that resumed in Oman on Saturday, after talks with Russia and China.

Omani officials have said a new round of US-Iran talks could be held on May 03 in Europe. No formal decision has been taken as yet.

Iran's reach out to Britain, France and Germany, known as the E3, suggests Tehran is keeping its options open and also wants to assess where the Europeans stand on the possible re-imposition of UN sanctions before October, when a resolution ratifying the 2015 accord expires.

Iran had communicated after last Saturday's talks with the United States a proposal to meet possibly in Rome on Friday. Should that not be possible, the Iranians also suggested discussions in Tehran before that date.

The second round of negotiations between Washington and Tehran took place in Rome with Iran saying serious differences remained.

The European and Western diplomats said the E3 were assessing whether it was in their interest to meet Iran now or wait to see how talks with Washington developed, but ruled out a meeting in Tehran.

"It is important to remain on the same page with all parties to the 2015 deal. Therefore, meeting the E3 countries this week ahead of the next round of talks with Americans would be useful," said the Iranian official.

 

United States being labelled untrustworthy

Donald Trump, after assuming charge of president of United States has issued many administrative orders. Though, many of these have been suspended for a predefined period, the super power and the largest democracy is being labelled "untrustworthy". It is also being said that the perception can vary depending on who is saying it, their political stance, and the context. Here are some of the narratives, it is left at the reader to have his/ her own view.

Shifting Foreign Policy

The US has had a tendency to change its foreign policy dramatically between administrations. What one president supports, another might reverse. For allies and international partners, this unpredictability creates a sense of instability and mistrust. The example often cited is that of the US joining and then withdrawing from the Iran nuclear deal, Paris Climate Agreement, and even the Trans-Pacific Partnership.

Military Interventions

The US has a long history of military involvement in other countries—some could be justified, but many remains controversial i.e. Iraq, Afghanistan, Libya. These interventions often came with promises of democracy or stability but often result in prolonged conflict or power vacuums. This forces the people in those regions, and globally, to question US intentions.

Economic Sanctions and Trade Wars

The US commonly uses economic sanctions as a foreign policy tool, which annoys people of these as well as other countries. Though US says, sanctions target governments, but people are the ultimate sufferers. The recent trade war with China and even allies cements the perceptions of unpredictability and economic aggression.

Domestic Issues Tarnish Global Reputation

Events like the Capitol riot, racial tensions, mass shootings, and political polarization have impacted how other countries view the governance and values of the US administration. Not only the image of US administration is tarnished, but its moral authority to dictate other countries is questioned.

Intelligence and Surveillance Concerns

Revelations like the Snowden leaks showed that the US was spying not just on adversaries but on allies also, even leaders of friendly nations like Germany. That definitely dents the trust.

Broken Promises/ Inconsistent Support

Countries/ groups that relied on US support—like the Kurds in Syria or Afghan have often felt abandoned when political priorities changed. That history leads others to question whether American support will endure when it is needed the most.

Way Forward

It must be kept in mind that despite all these broken promises, last minute ditches and sudden and abrupt change in policies, many people still see the United States a global leader in innovation, freedom, and human rights. The “untrustworthy” label is becoming universal and once an alternative currency to the Greenback becomes a reality the United States would be left alone.

 

 

 

 

Iran to lose oil sales to Syria

According to Argus, the removal of Syrian president Bashar al-Assad from power over the weekend has not only dealt a major blow to Iran and its designs for the Levant region, but it has also eliminated a critically important outlet for Tehran's sanctions-hit oil. Iran produced around 3.33 million bpd during September-November.

Long considered Iran's top Arab ally, Assad enjoyed significant military and economic support from Tehran over the past decade, as Iran saw him as the focal point for its regional influence. Syria also provided the main supply routes to Lebanon's Hezbollah militia, the crown jewel in Iran's so-called ‘Axis of Resistance'.

Part of Iran's assistance was in the form of shipments of crude and refined oil products to help Assad's regime meet fuel demand in the areas under its control.

Once more than a 600,000 barrels per day (bpd) producer, Syria's crude output has been on the decline over the past three decades. Just before the start of the civil war in 2011, production had already slipped below 400,000 bpd. lately, it was less than 100,000 bpd, and only around 16,000 bpd of that comes from fields in areas under the former government's control.

This left Assad's regime — itself restricted by western sanctions — critically short of crude to feed its two refineries in Banias and Homs, even though both have been operating below capacity because of damage sustained during the civil war.

Iran helped plug the gap by sending crude and products to the 140,000 bpd Banias refinery on Syria's Mediterranean coast on an ad hoc basis.

Iranian crude exports to Syria averaged around 55,000 bpd in January-November this year, down from 80,000 bpd in 2023 and 72,000 bpd in 2022, according to data from trade analytics firm Kpler.

Vortexa puts shipments higher at 60,000 to 70,000 bpd so far this year and 90,000 bpd in 2023. Iran has also been sending around 10,000 to 20,000 bpd of refined products to Syria in recent years, according to consultancy FGE. Iran's oil exports to Syria have mostly been in the form of grants to support the Assad regime. The government's collapse could put an end to these flows for the time being, while Tehran takes a wait and see approach to what comes next in Syria.

The first sign of that came over the weekend when the Iran-flagged Lotus, which left Kharg Island on November 11, destined for Banias, reversed course just as it was about to enter the Suez Canal. The tanker is now headed back through the Red Sea without specifying a destination.

Although supplies to Syria make up a very small share of Iran's overall 1.6 million to 1.8 million bpd of crude exports, Tehran may not want to lose it as an outlet for good, given the difficulties of finding a replacement while sanctions remain in place.

"The flow will stop, at least for the time being," said Iman Nasseri, managing director for the Middle East at FGE.

Iran will want to continue supplying this oil to Syria, or else it may be forced to cut production by anywhere between 50,000 to 100,000 bpd if it is unable to ultimately place those barrels in China. Alternatively, Iran could opt to build the volumes it holds offshore in floating storage.

"We usually see the same tankers shuttling between Iran and Syria," according to Vortexa's senior oil analyst Armen Azizian. "If that trade subsides, we could see some of these tankers unemployed or put into floating storage, which would rise, at least in the short-term," he said.

Lotus is one of these tankers, having made the trip to Syria and back five times in 2023, and twice so far in 2024. The crude cargo it is carrying now "could be returned to Iran and put into onshore tanks or go into floating storage off Iran," Azizian said.

 

Dollar hegemony in danger

The history shows that the world’s base currency can lose its position, as happened with Britain’s pound in the 20th century. The US economy is much smaller as a share of world output now than it was after WWII, when its dominance began. And now some investors are flagging concerns about the potential for chaotic images emanating from the US election that could undermine confidence in American rule-of-law and the broader political system.

In 2009, after the meltdown in US mortgage securities triggered the biggest financial crisis since the Great Depression, China’s central bank chief of the time issued a high-profile call to move the global financial system away from the dollar. 

Fifteen years later, it continues to reign supreme — having weathered the launch of trade wars under Donald Trump’s administration and a welter of US sanctions on other countries that showcased the risk, for some nations anyway, of keeping assets in dollars. The greenback remains the main currency of choice in global reserves and massively dominates the foreign-exchange market.

Multiple stewards of US economic policy over decades have highlighted the importance of democratic, transparent governance and respect for the law in underpinning the dollar’s role. A violent attempt to disrupt the transfer of power occurred in the wake of the last election, and had little impact on markets. But further instances could have consequences, some warn.

“You can’t be complacent around any of these things” with regard to the dollar, Robin Vince, CEO of BNY Mellon — one of the world’s largest custodians of financial assets — said in an interview last week. “As is the case with many tipping points, you don’t quite know when you’re approaching it until you go over the other side.”

Thierry Wizman, a three-decade Wall Street veteran, said “the American exceptionalism narrative could end if traders lose faith in US institutions.”

“The way that could happen in the next few weeks is if we have an election without a definitive result for several weeks, and where people can’t trust the institutions to adjudicate any of these disputes,” said Wizman, a global currency and rates strategist at Macquarie.

Courtesy: Bloomberg

 

 

Remembering the day Saddam invaded Iran

On September 22, 1980, months after the victory of the Islamic Revolution in Iran, the army of the Iraqi Ba’athist regime led by Saddam Hussein invaded the Iranian border towns in the southwestern province of Khuzestan and launched a massive aerial bombardment on Iran, igniting an eight-year conflict with Iran.

The Iranians fought back to expel the invaders from their occupied soil. The Saddam regime, which received all-out support from the big powers, imposed the war on Iran that lasted until the summer of 1988.

Since the beginning of the war, Iran demanded that Iraq be officially declared as the initiator of the war. However, neither the Iraqi Ba’athist regime nor any of the major powers were willing to officially declare that the Saddam regime initiated the war against Iran.

The UN Security Council which has the primary responsibility for international peace and security failed to take any action to declare the Saddam regime as the aggressor and initiator of the war.

The Ba’athist regime committed crimes against the Iranian nation, using chemical weapons, firing missiles at civilian targets, bombarding cities and villages during the war, and other vicious acts.

Influenced by big powers, who armed the Saddam regime to the teeth, the Security Council refused to adopt an impartial stance in that regard during the eight years of war.

When Saddam tore up the 1975 Algiers Agreement in front of cameras and then started the war, the Security Council refused to say who started the war and which side violated the principle of non-invasion.

The Iraqi Ba’athist regime used to refer to border skirmishes that preceded the invasion as its pretext for starting the war. The regime claimed that it took action after a long history of border disputes.

The reality was that Saddam couldn't wait to tear up the Algiers agreement amid political instability and fast pace of developments in the post-revolution Iran. He might also have been pushed by hostile Western states that were angered by the victory of the Islamic Revolution.

Instead of the UN Security Council, it was UN Secretary General Javier Perez de Cuellar who declared Iraq as the aggressor and the initiator of the war in his report to the UN body in December 1991.

This action of the UN Secretary General to officially declare Iraq the initiator of war endorsed Iran’s right to self-defense.

The UN report naturally required Iraq to pay compensation to Iran, which was estimated at about one trillion dollars.

This action of the United Nations took place after the continuous political efforts of the Iranian authorities. It is considered a great victory for Iran because it proved Iran's right to self-defense against the aggressor.

This action took place while the propaganda apparatus of the Saddam regime and its backers were trying to manipulate public opinion in the world that Iran was the initiator of the war.

At the start of the war, Saddam was Iraq's undisputed political and military ruler and Iraq's national interests were his personal interests.

There had been border disputes and skirmishes before the start of the invasion which Saddam's regime sought to present as a pretext for attacking Iran. Saddam must have thought that amid instability and nascent revolution, it was the right time to materialize his malicious goal of seizing part of the Iranian territory.

The Iraqi dictator’s likely goal was to annex some parts of the oil-rich Khuzestan, which has a sizeable ethnic Arab population.

Border skirmishes preceded the invasion. Iraqi President Saddam Hussein claimed that Iran's Islamic government was trying to destabilize his country and the whole Middle East. But the then UN chief rejected that argument.

In a letter to the UN Security Council, Secretary-General Javier Perez de Cuellar in December 1991 Iran blamed Iraq for starting the war.

He rejected the Iraqi regime’s argument that border skirmishes pushed Iraq to invade Iran.

"Even if before the outbreak of the conflict there had been some encroachment by Iran on Iraqi territory, such encroachment did not justify Iraq's aggression against Iran -- which was followed by Iraq's continuous occupation of Iranian territory during the conflict," Javier Perez de Cuellar said.

Iran has always criticized the double standards of western states in dealing with the Iraqi war on Iran, especially the Security Council and Western powers were quick to take action against the regime after it invaded Kuwait on August 02, 1990.

Courtesy: Tehran Times

Iran wants US to abandon its hostility

Iran could hold direct talks with the United States if Washington demonstrates in practice that it is not hostile to the Islamic Republic, said President Masoud Pezeshkian on Monday.

Pezeshkian was responding to a question at a news conference in Tehran on whether Tehran would be open to direct talks with the US to revive a 2015 nuclear deal.

Former US president Donald Trump reneged on that deal in 2018, arguing it was too generous to Tehran, and restored harsh US sanctions on Iran, prompting Tehran to gradually violate the agreement's nuclear limits.

"We are not hostile towards the US, they should end their hostility towards us by showing their goodwill in practice," said Pezeshkian, adding, "We are brothers with the Americans as well."

After taking office in January 2021, US President Joe Biden tried to negotiate a revival of the nuclear pact under which Iran had restricted its nuclear program in return for relief from US, European Union and UN sanctions.

However, Tehran refused to directly negotiate with Washington and worked mainly through European or Arab intermediaries.

 

How far can crude oil prices plunge?

We are of the view that crude oil price may fall below US$60 per barrel, if production in countries like Libya, Iraq, Iran and Venezuela rise to normal. Sanctions on Russia and Iran are also there to avoid glut. We have the convictions that unrest in some of the African countries is there to avoid fall of crude oil price below US$50 per barrel  

Brent crude futures fell below US$70 a barrel on Tuesday for the first time since December 2021, after OPEC Plus revised down its demand forecast for this year and 2025.

Brent crude futures were traded at US$69.51 a barrel and US West Texas Intermediate (WTI) crude slipped to US$66.21. On Monday, both benchmarks had risen about 1%.

On Tuesday, the Organization of the Petroleum Exporting Countries (OPEC) in a monthly report said world oil demand will rise by 2.03 million barrels per day (bpd) in 2024, down from last month's forecast for growth of 2.11 million bpd. Until last month, OPEC had kept the forecast unchanged since it was first made in July 2023.

OPEC also cut its 2025 global demand growth estimate to 1.74 million bpd from 1.78 million bpd. Prices slid on the weakening global demand prospects and expectations of oil oversupply.

On Monday, Chinese data showed consumer inflation accelerated in August to its fastest in half a year, though domestic demand remained fragile, and producer price deflation worsened.

Data released on Tuesday showed China's exports grew in August at their fastest in nearly 1-1/2 years, yet imports disappointed with domestic demand depressed.

“If we lose China this market is going to have a problem because OPEC just cannot cut enough to offset the US and Brazilian position, and some of the other reservoirs at work,” said John Kilduff, partner at Again Capital.

 

US Reactions on Pezeshkian's Victory

We have picked up these quotes directly from a post which was sent to us by the United States Institute of Peace. These quotes seem to have an extremely biased opinion about Iran. One fails to understand the duality of standards. Hasn’t United States godfathering Israel in the genocide in Gaza and supplying all sorts of lethal arms to Ukraine. The readers are invited to read these quotes dispassionately and form their own opinion. 

National Security Council Coordinator for Strategic Communications John Kirby on July 08, 2024 said, “We’re not in a position where we’re willing to get back to the negotiating table with Iran just because they elected a new president. They’re still supporting terrorist groups like Hamas and Hezbollah. They’re still supporting the Houthis as the Houthis attack ships in the Red Sea. They’re still attacking shipping as well. And they’re still supplying drones and drone technology and drone expertise to the Russians so that the Russians can continue to kill innocent Ukrainians like they did over the weekend.”

“We will see what Pezeshkian wants to get done, but we are not expecting any changes in Iranian behavior sadly.”

State Department Spokesperson Matthew Miller on July 08 said, “So we have no expectations that this election will lead to a fundamental change in Iran’s direction or its policies. At the end of the day, it’s not the president that has the ultimate say over the future of Iran’s policy; it is the supreme leader, and of course we have seen the direction that he has chosen to take Iran in. Obviously, if the new president had the authority to make steps to curtail Iran’s nuclear program, to stop funding terrorism, to stop destabilizing activities in the region, those would be steps that we would welcome. But needless to say, we don’t have any expectations that that’s what’s likely to ensue.”

“So let’s let Pezeshkian take office first. I don’t have anything to announce today. We have always said that diplomacy is the most effective way to achieve an effective, sustainable solution with regard to Iran’s nuclear program, one of the issues with which we have great concerns, obviously, and nothing about the election has changed that. But we have also made clear that we are far from any kind of meaningful diplomatic resolution right now given Iran’s escalation across the board.”

State Department spokesperson Vedant Patel on July 01, said, "We’re not in a position to confirm or – any turnout number or speculate on what the implications of that might mean for the Iranian regime. Our viewpoint is that even the Iranian Government’s official numbers about turnout are most – like most other things as it relates to the Iranian regime, are unreliable. Our view is that these elections in Iran are not free and fair, and we have no expectation that these elections and whatever the outcome might be will lead to a fundamental change in Iran’s direction or lead the Iranian regime to offer more respect for human rights and more dignity for its citizens."

Deputy Special Envoy for Iran Abram Paley on June 26 said, “As the Iranian regime prepares for its presidential elections, the US unfortunately has no expectation of free and fair elections or fundamental change in Iran’s direction. Of course, the candidates have been hand-picked by the Guardian Council, but we also know the Iranian people lack access to even the most basic freedoms; necessary features of any democracy. In the face of the authoritarian regime’s long history of harassing and intimidating journalists, suppressing election coverage, and denying freedom of peaceful of assembly, we support the Iranian people. The United States will continue to defend human rights in Iran, shine a light on the regime’s repression, and support a free and democratic future.”

State Department spokesperson on June 30 said, "The elections in Iran are not free and fair.”

"Unfortunately, we have no expectation that these elections, whatever the outcome, will lead to fundamental change in Iran’s direction or more respect by the Iranian regime for the human rights of Iran’s citizens.”

 

Dollar dominance eroding, though slowly

Dollar dominance—the outsized role of the US dollar in the world economy—has been brought into focus recently as the robustness of the US economy, tighter monetary policy and heightened geopolitical risk have contributed to a higher greenback valuation. At the same time, economic fragmentation and the potential reorganization of global economic and financial activity into separate, non-overlapping blocs could encourage some countries to use and hold other international and reserve currencies.

Recent data from the IMF’s Currency Composition of Official Foreign Exchange Reserves (COFER) point to an ongoing gradual decline in the dollar’s share of allocated foreign reserves of central banks and governments.

Strikingly, the reduced role of the US dollar over the last two decades has not been matched by increases in the shares of the other “big four” currencies—the euro, yen and pound. Rather, it has been accompanied by a rise in the share of what we have called nontraditional reserve currencies, including the Australian dollar, Canadian dollar, Chinese renminbi, South Korean won, Singaporean dollar, and the Nordic currencies. The most recent data confirm this trend.

These nontraditional reserve currencies are attractive to reserve managers because they provide diversification and relatively attractive yields, and because they have become increasingly easy to buy, sell and hold with the development of new digital financial technologies (such as automatic market-making and automated liquidity management systems).

This recent trend is all the more striking given the dollar’s strength, which indicates that private investors have moved into dollar-denominated assets. Or so it would appear from the change in relative prices.

At the same time, this observation is a reminder that exchange rate fluctuations can have an independent impact on the currency composition of central bank reserve portfolios.

Changes in the relative values of different government securities, reflecting movements in interest rates, can similarly have an impact, although this effect will tend to be smaller, insofar as major currency bond yields generally move together.

Taking a longer view, over the last two decades, the fact that the value of the US dollar has been broadly unchanged, while the US dollar’s share of global reserves has declined, indicates that central banks have indeed been shifting gradually away from the dollar.

At the same time, statistical tests do not indicate an accelerating decline in the dollar’s reserve share, contrary to claims that US financial sanctions have accelerated movement away from the greenback.

To be sure, it is possible, as some have argued, that the same countries that are seeking to move away from holding dollars for geopolitical reasons do not report information on the composition of their reserve portfolios to COFER.

It is worth noting that the 149 reporting economies make up as much as 93% of global foreign exchange reserves.

One nontraditional reserve currency gaining market share is the Chinese renminbi, whose gains match a quarter of the decline in the dollar’s share.

The Chinese government has been advancing policies on multiple fronts to promote renminbi internationalization, including the development of a cross-border payment system, the extension of swap lines, and piloting a central bank digital currency.

It is interesting to note that renminbi internationalization, at least as measured by the currency’s reserve share, shows signs of stalling out. The most recent data do not show a further increase in the renminbi’s currency share - some observers may suspect that depreciation of the renminbi exchange rate in recent quarters has disguised increases in renminbi reserve holdings. However, even adjusting for exchange rate changes confirms that the renminbi share of reserves has declined since 2022.

Some have suggested that what we have characterized as an ongoing decline in dollar holdings and rise in the reserve share of nontraditional currencies in fact reflects the behavior of a handful of large reserve holders.

Russia has geopolitical reasons to be cautious about holding dollars, while Switzerland, which accumulated reserves over the last decade, has reason to hold a large fraction of its reserves in euros, the euro area being its geographical neighbor and most important trading partner.

When analysts exclude Russia and Switzerland from the COFER aggregate, using data published by their central banks from 2007 to 2021, they find little change in the overall trend.

In fact, this movement is quite broad. A paper by the IMF in 2022, identified 46 “active diversifiers,” defined as countries with a share of foreign exchange reserves in nontraditional currencies of at least 5% at the end of 2020. These include major advanced economies and emerging markets, including most of the Group of Twenty (G20) economies. By 2023, at least three more countries (Israel, Netherlands, Seychelles) have joined this list.

IMF also found that financial sanctions, when imposed in the past, induced central banks to shift their reserve portfolios modestly away from currencies, which are at risk of being frozen and redeployed, in favor of gold, which can be warehoused in the country and thus is free of sanctions risk.

This shows that the demand for gold by central banks responded positively to global economic policy uncertainty and global geopolitical risk. These factors may lie behind the further accumulation of gold by a number of emerging market central banks. It is important to recall that gold as a share of reserves still remains historically low.

In sum, the international monetary and reserve system continues to evolve. The patterns IMF has highlighted earlier—very gradual movement away from dollar dominance, and a rising role for the nontraditional currencies of small, open, well-managed economies, enabled by new digital trading technologies—remain intact.

 

MENA: New proxy war ground for US and China

Tensions between the United States and China are expanding beyond the Asia-Pacific region. The Middle East and North Africa (MENA) is likely to be one of many venues in what might be a new Cold War between Washington and Beijing.

We can imagine how Washington and Beijing’s respective global outlooks and ability to project (soft and hard) power could affect their future relations with the MENA region.

How MENA countries deal with each other and the role they play in the emerging global energy and economy transitions could influence how the two superpowers engage with the region in ways as interesting and important as what the superpowers are able to do themselves. On the MENA side of the equation, two critical dimensions are likely to shape their role in the future US-China competition in the region:

Intraregional politics

The first is how regional countries relate to each other with functional and practical economic and political integration, or sustained dysfunction and instability. Prior to the current war in Gaza, there was a trend toward de-escalation, stabilization, and integration.

Whenever that momentum might be regained, under the “functional and practical” route, we could imagine MENA nations looking in new ways at the lessons of pan-regional intergovernmental organizations.

The region could explore policies and mechanisms that emulate the practical benefits afforded to member states of other regional blocs like the European Union and the Association of Southeast Asian Nations. Such ideas could first lower trade barriers, then foster closer economic and commercial ties across the region.

Similarly, the thinking behind the Helsinki Final Act of 1975 and the Organization for Cooperation and Security in Europe could influence MENA governments’ approach to their citizens’ human rights and each other’s domestic affairs.

The functional and practical path would represent a MENA equipped with deliberative, consultative decision-making processes to act with agency, putting its own interests before the dictates of the US-Chinese competition.

The alternative path is easy to define, MENA governments continue to support various armed groups in proxy wars, and use that environment to ignore human rights, enabling outside players to exploit that dysfunction.

Levers of the future economy

The fossil fuel resources of Bahrain, Iran, Iraq, Kuwait, Libya, Oman, Qatar, Saudi Arabia, and the United Arab Emirates ‑ energy-rich club might soon include Egypt and Israel ‑ are likely to remain MENA’s main sources of leverage vis-à-vis Washington and Beijing — at least for the next couple of decades. Given the desire of two superpowers to secure the region’s oil and gas for themselves and their allies, or deny them to adversaries, US and Chinese companies will remain powerhouses in regional markets.

MENA is poised to influence the future global stage, and gain agency in the US-China competition over the region, by leveraging its energy and financial power in different ways in the future.

As the world turns to renewable energy, the region’s petrostates are simultaneously ramping up economic diversification into tech sectors, while also leveraging their wealth to finance climate-friendly energy projects and other green economy endeavors in their neighborhood and around the world.

The new frontier for the region’s resource- and capital-rich countries will be fostering innovation and science/technology/ideas hubs for the post-carbon economy that humanity intends to build in the 21st century.

Beside eventually waning hydrocarbons and ascending green energy, new logistical/transportation/energy networks have proliferated in the region and are likely to further increase its geopolitical and commercial significance.

Be it through long-established routes, such as the Suez Canal, or new and proposed ones, such as the Trans-Caspian International Transport Route, India-Middle East Corridor, and the Turkish-Iraqi-Emirati-Qatari Development Road, MENA is going to be sitting at the center of global trade networks. Many of the region’s seaports and airports will also play an expanded role in international affairs.

Iranian oil output 3.1 million barrels per day

The US Energy Information Administration (EIA) in a report disclosed Iranian crude oil output at 3.1 million barrels per day (bpd). This indicates Iranian oil output has risen 500,000 bpd in the current year.

On October 29, the spokesman of the Iranian Oil, Gas and Petrochemical Products Exporters’ Union said that Iran’s oil production has increased to 3.4 million barrels per day, despite the US sanctions aimed at curbing oil exports and the associated revenue to Iran’s government.

“The latest reports show that Iran’s oil production has increased to 3.4 million barrels per day, while it was about 2.9 million barrels per day until recently,” Hamid Hosseini told IRNA.

Given that previously closed oil wells have been reopened and returned to the production cycle, Iran can increase its oil production to 3.8 million bpd, he said.

“If we seek to increase oil exports from 3.8 million barrels per day to 4.2 million bpd in the 7th National Development Plan, we need to invest an average of US$25,000 for each barrel of oil. Since these oil wells, we have the opportunity to increase the oil production to 3.8 million barrels per day,” he explained.

Hosseini also said that about 40,000 bpd have been added to the country’s oil production from the Sepehr and Jafir oilfields, which can help with the economic growth of the country.

 

Why can’t Pakistan buy oil and gas from Iran?

The United States first imposed sanctions on Iran in 1979 on the pretext of radical students storming its embassy and taking staff hostage. Since then sanctions have remained in force, in fact new sanctions have been imposed over the years.

While the United States continues to play the mantra that Iran is busy in the production of nuclear warheads, it hasn’t come up with any credible proof. Many doubt it is a hoax call like presence of Osama bin Laden in Afghanistan and Iraq busy in the production of weapons of mass destruction (WMD).

The growing perception is that the United States considers Iran a hurdle in the creation of its hegemony in the region, the major source of crude oil.

There is also growing impression among Pakistanis that the successive governments in Pakistan due to the US pressure stopped buying crude oil from Iran and didn’t go ahead on the construction of Iran-Pakistan gas pipeline.

The US administration is fully cognizant of the fact that Pakistan’s GDP growth is being pegged due to looming energy crisis. However, Pakistan is not allowed to buy crude oil and gas from Iran.

It is on record that India has been buying crude oil from Iran and also from Russia, despite imposition of sanction.

It is high time Pakistan should ask the United States to allow it to import crude oil and gas from Iran.

To be honest, the United States has no legal or moral authority to restrict any country from buying Iranian energy products.

Lately, the United States has not only swapped prisoners with Iran, but also allowed transferred US$6 billion to Iran. This was in fact Korean money payable to Iran, against crude oil already purchased.

Is it not the height of hypocrisy that United States has used money which it never owned for the exchange of prisoners, but didn’t release the funds when Iran needed it the most during COVID-19 pandemic?

The time has come Pakistanis should assert themselves and convince the US that buying energy products from Iran bodes well for Pakistan. If India can pay Russia in different currencies, Pakistan should also be allowed to buy energy products from Iran against supply of food.

On may recall that during sanctions on Iraq, the country was allowed to export certain quantity of crude oil and use the proceeds for buying food under “Oil for Food Program”.

Iranian oil exports hit five year high

Iranian crude exports and oil output have hit new highs in 2023 despite US sanctions, according to consultants, shipping data and a source familiar with the matter, adding to global supply when other producers are limiting output.

Tehran's oil exports have been limited since former US President Donald Trump in 2018 exited a 2015 nuclear accord and reimposed sanctions aimed at curbing oil exports and the associated revenue to Iran's government.

Exports have risen during the term of his successor President Joe Biden. Iranian and Western officials have said the US is holding talks with Iran to sketch out steps that could limit the nuclear program.

Iranian crude exports exceeded 1.5 million barrels per day (bpd) in May 2023, the highest monthly rate since 2018, according to Kpler, a provider of flows data. These were around 2.5 million bpd in 2018, before the US withdrawal from the nuclear deal.

Iran said in May it has boosted its crude output to above 3 million bpd. That's about 3% of global supply and would be the highest since 2018, according to figures from the Organization of the Petroleum Exporting Countries (OPEC).

A source familiar with the matter told Reuters earlier this month output was still at this level.

The International Energy Agency this week put Iran's May production at 2.87 million bpd, close to Iran's official figure.

The rise from Iran comes as OPEC Plus, which includes OPEC, Russia and other allies, is cutting output to support the oil market, where expectations that economic weakness will dent demand have pressured prices.

Other analysts say Iran's production and exports have risen. SVB International, a consultant, estimates crude production hit 3.04 million bpd in May, up from 2.66 million bpd in January. Exports of crude and condensate were 1.93 million bpd in May.

"Sanctions are in place but perhaps not fully implemented or monitored," said Sara Vakhshouri of SVB, who has previously said during Biden's term there hasn't been any serious crackdown or action against Iran's oil exports.

"Also all of these supply volumes are in the dark market, where there is no transparency and so these are not reflected in formal global supply and export data."

On the issue of whether the US is strictly enforcing the sanctions, the US State Department and Treasury did not immediately respond to requests for comment.

China is Iran's biggest customer while volumes also head to Syria and Venezuela, according to analysts and shipping data.

OPEC+ Plus agreed on June 4 a wide-ranging deal to limit oil supply into 2024. Iran is not required to make cuts as, together with Venezuela and Libya, it has an exemption. Nigeria is not exempt but has faced internal challenges in raising output.

Analysts at JP Morgan in a report this week said OPEC+  Plus needed to cut more. They lowered their Brent oil-price forecast for 2023 to US$81 a barrel from US$90, saying rising supply was offsetting demand growth.

"Within the broader OPEC Plus alliance, supply has been also rising outside the core members," the analysts at JP Morgan said, and revised up their production expectations for Venezuela, Nigeria and Iran by almost 600,000 bpd from November last year.

"Invariably, to make room for this supply growth, OPEC Plus needs to cut more, were the alliance to adhere to the market management strategy."

 

 

 

 

 

 

Iranian president meets Venezuela president

Iranian President Ebrahim Raisi and his accompanying delegation held several meetings with Venezuelan officials in a bid to deepen partnership between Tehran and Caracas. 

On Monday morning Iran’s local time, President Raisi left Tehran for a tour of three Latin American nations -Venezuela, Nicaragua, and Cuba- as the head of large politico-economic delegation. 

Upon his arrival in the Venezuelan capital, the Iranian president was accorded an official reception in which the national anthems of Iran and Venezuela were played. During the playing of the national anthem of the Islamic Republic of Iran, a group of Venezuelan children and teenagers sang the national anthem of Iran in Persian.

After the reception ceremony, President Raisi and his Venezuelan counterpart Nicolas Maduro held a meeting in which they discussed ways to boost bilateral cooperation. 

In the meeting, Raisi described the relations between the two countries as strategic. 

“Despite the expansion of relations between Iran and Venezuela in recent years, diverse mutual capacities require the agreements of the two countries to be implemented as quickly as possible and the relations between them to be upgraded to higher levels,” he said, according to the official website of the Iranian presidency. 

Raisi underlined the achievements that Iran made while being under US. sanctions. He said Iran can share these achievements with Venezuela.

“The Iranian nation has gained valuable experiences and achievements in the field of science and technology by standing up to the domination system and overcoming the sanctions, which can be shared with Venezuela,” Raisi noted.

The Iranian president also touched on the emerging new world order, saying that such a development can benefit Iran and Venezuela. Stating that a new system is being formed in the world, Raisi said that the future of these developments will benefit the freedom-seeking and independent countries of the world.

President Maduro, praised the history of strategic relations between Tehran and Caracas and announced his determination and the members of the cabinet of this country to start a new round of efforts and measures to expand relations with the Islamic Republic of Iran.

Maduro also hailed the emerging new world order. “In the new world that is being formed, imperialism is falling and the countries that have resisted the arrogance of the arrogant are on the verge of victory,” he said. 

Stressing the need for establishing a direct air link between the two countries and strengthening shipping lines to increase trade between Iran and Venezuela Maduro said, “The two countries have good capacities for cooperation in the fields of tourism, agriculture and animal husbandry.”

In the meeting of the high-ranking delegations of Iran and Venezuela, the presidents of the two countries called Martyr Haj Qassem Soleimani and the late Venezuelan politician Simón Bolivar as heroes of the fight against domination and imperialism.

Maduro praised General Soleimani. “I always remember General Soleimani and I pay tribute to him. In 2018, a brutal cyber attack from United States was launched on our energy infrastructure. He directed a team to investigate the cyberattack and helped us a lot. Many do not know about that,” Maduro said, according to Fars News. 

He added, “I also pay my respects and we will install his bust in the tomb of Simon Bolivar.”

In Caracas, President Maduro also awarded Raisi the national honor of Venezuela.

Raisi and Maduro also participated in Iran-Venezuela high-level joint commission meeting. After the meeting, the presidents of the two countries held a joint press conference.  

“Iran and Venezuela have common interests and views in the fields of independence, freedom and justice, which has brought the people of these two countries closer together,” Raisi said at the presser. 

He also stated that the people of Iran and Venezuela have common enemies who do not want them to live independently. 

“The Iranian nation has proven its friendship with the Venezuelan people over the past years and has always shown that it is their friend during their difficult times,” Raisi added.

Pointing out that the relations between Iran and Venezuela are not ordinary, but strategic, President Raisi said, “Having common interests, views and enemies have made cooperation deep and strategic.”

He added, “Today, the two countries are determined to develop relations in different fields.”

Raisi stated, “The Islamic Republic of Iran, thanks to the blessings of the Islamic Revolution, the pure blood of the martyrs, and the resistance of the Iranian people, has been able to turn the pressures and sanctions into opportunities, and in this way has provided various capacities that are ready to be shared with the resilient nation of Venezuela.”

At the end, Raisi once again paid tribute to the national heroes of Venezuela and honored the memory and name of the resistance martyr Haj Qassem Soleimani and saluted his noble soul.

 

Pakistan-Iran to revive gas pipeline project

Pakistan and Iran on Wednesday agreed to explore new avenues of collaboration in the fields of aviation including direct flight, revival of gas pipeline project and expansion of trade between the two nations.

The understanding was reached during a meeting between Commerce Minister Naveed Qamar and visiting Chairman of the Commission of National Security and Foreign Policy of the Majlis of the Islamic Republic of Iran Vahid Jalalzadeh, who is leading a high-level delegation to Pakistan to discuss various measures to promote bilateral economic relations between the two countries.

An official announcement issued after the meeting said that both sides underlined the need to strengthen economic ties and emphasized the importance of increased connectivity.

Jalalzadeh proposed the initiation of direct flights between Iran and Pakistan to enhance travel and business opportunities.

Qamar acknowledged the significance of this proposal and expressed his support for establishing direct flights as a means to facilitate trade and promote people-to-people exchanges.

During the meeting, the discussions also touched upon the long-standing issue of the Pak-Iran Gas pipeline. Qamar stressed the importance of expediting the project, as it holds immense potential for energy cooperation between the two countries.

He pledged his commitment to resolve any obstacles and move forward with the pipeline, which would bring substantial benefits to both nations.

Recognizing the current trade volume of approximately US$2 billion as insufficient, Jalalzadeh urged the need to take solid steps to increase it to a multi-billion-dollar level. However, there is no official trade between the two countries owing to the non-availability of banking channels and restrictions.

Qamar emphasized the importance of opening new border markets and implementing a barter trade system to facilitate greater commercial exchange. These measures, he believed, would significantly boost trade volume.

Jalalzadeh also invited Qamar to visit Iran.

The inauguration of one of the six crossings at the Pasheen Border on May 18 by the prime minister of Pakistan and the president of Iran also came under discussion.

Dark fleet: Creeping anarchy in oceans

The fatal explosion that ripped through the tanker Pablo offshore Malaysia has focused attention on the dangers the ‘dark fleet’ raises for shipping safety, reports Seatrade Maritime News.

It ought to be a red light flashing - an alarm signal alerting both world shipping and its regulators that there is something with the potential to do serious harm to an essential industry already under scrutiny for its environmental record.

The gruesome wreckage of the Aframax Pablo, swinging to its anchor in the South China Sea, ought to be ringing alarm bells, wherever the ‘dark fleet’ of sanction-busting tankers is to be found.

This is the second, albeit far more serious accident (with its three missing crew and multiple injuries) in these busy waters.

Where is the will to stop any of this growing threat to other shipping, coastal states and the global liability and compensation regime?

One does not require a terribly long memory of a period in shipping’s recent history of a time when low maintenance became no maintenance, with fatal consequences. And there is no secret about the risks that are being run by the shadowy figures that have moved into the transport of cargo from Russia, Venezuela and Iran.

At the recent meeting of the IMO Legal Committee, a whole range of doubtful practices were detailed, ranging from the dangers of ship-to-ship transfers of oil in the high seas and other unsuitable locations, to the routine practices of operating with AIS transponders turned off, a fairly conclusive reason for having something to hide.

Even more important and worrying is the age and operational standards of the dark fleet, said to be between 300-600 ships, with overdue inspections, almost certain sub-standard maintenance, opaque ownership and extremely dubious insurance status.

What is particularly worrying is the speed with which this deterioration has arisen and its threat to a well-run system that gave reasonable confidence to the industry players and the regulatory regime.

Is there any will to stop this creeping anarchy, or is it all to be lost in tedious legal arguments about sovereignty and freedom of the seas?

Where is the robust, international and immediate response that will stop this becoming a far worse international scandal that will leach out into the rest of world shipping?

There are flag states, which could just about cope with the registration of time-expired tiny coasters, which now find to their delight they are responsible (one should use this word advisedly), for fleets of elderly VLCCs, hopefully providing them with a delightful uplift in fees.

There are ships which change their identities almost overnight, owned by brass-plate entities of dubious provenance that will disappear in the blink of an eye.

One doesn’t want to even consider the potential for serious criminality and money laundering in this exciting currency of elderly ships.

There are classification societies, “Responsible Organizations” with no technical competence and lucrative business for suppliers of seafarers to run these ships for one-off voyages, about which questions will not be welcomed.

Who will be picking up the pieces after these ships come to grief? Where is the traceability, who might conceivably be liable for the wreck removal, the pollution response, the compensation for the relatives of the dead and the injured.

One might suggest that it is just a phase caused by temporary circumstances like the war and the imposition of sanctions (which have always been problematic). But while it lasts, are innocent others just bound to suffer from the almost automatic evasion of liabilities after the inevitable accidents? Why pay into pollution funds when the evasive…..evade?

It is probably true that there are some parts of the world at more risk than others from the deterioration of the dark fleet over time.

International maritime lawyers might huff and puff but who could possibly blame coastal states from unilaterally banning these ships from their EEZs and if they have appropriate military means, subjecting ships which stray into their seas to proper inspections.

Innocent passage isn’t very innocent when it involves ships with thoroughly suspect credentials, so it should be perfectly legitimate to ask questions, prohibit anchoring or ship-ship transfers.

Do we just sit around and wait for further groundings, collisions, explosions and other calamities, possibly involving a great deal of split oil.