The GCC, Iran and Gwadar
More than 30 crude oil tankers pass through the Strait of Hormuz daily, carrying some 35 million barrels of hydrocarbons, according to oil analytics firms. Though Saudi Arabia ranks as the world’s top producer, Iran is the third-largest producer in the Organization of the Petroleum Exporting Countries (OPEC).
With the imposition of stringent sanctions, US President Donald Trump is resolute in curbing Iran’s petroleum exports, which make up 80 percent of its national revenue. Consequently, 2 million barrels per day will vanish from the market, skyrocketing prices.
Iranian President Hassan Rouhani is outraged, threatening to disrupt oil shipments from neighboring Gulf countries. The so-called moderate is repeating the mantra of his predecessors. This is Tehran’s usual blackmail whenever it is pressed to the wall. Due to national boundaries, the actual width of the shipping lane is no more than 3.2 km.
During the war with Iraq in the 1980s, Iran attacked shipping vessels carrying hydrocarbons from its Arab rivals. The US Navy had to intervene to keep open the supply lane, which fulfills 85 percent of Asia’s energy needs.
In January 2012, upon the imposition of UN Security Council sanctions, Tehran made the same threat. Its navy often conducts military drills in the name of countering piracy and defending its coastline, so it could make good on its threat, but it would be suicide.
Iranian-Arab relations may have sunk to their lowest ebb, but both sides have so far exercised restraint to avoid direct confrontation. However, sanctions and the wrecked Iranian rial could lead Tehran to opt for extreme measures rather than reconciliation. Arab Gulf states have prepared themselves militarily, and worked out other options such as diverting exports to Red Sea coasts to continue an uninterrupted supply of petroleum.
China’s development of Pakistan’s Gwadar port, at the mouth of the Arabian Sea and 400 km from the Strait of Hormuz, offers a promising solution. Since China is Gulf Cooperation Council (GCC) member states’ biggest trading partner and energy importer, the security situation in the region is an immediate concern for China. Half of its oil needs are met by Middle Eastern states.
A network of GCC pipelines… will secure oil supplies to Pakistan and China, and become home to massive storage depots in case of direct conflict between Arab states and Iran.
NAVEED AHMAD
Pakistan’s Frontier Works Organization is working to lay an oil pipeline from Gwadar to the Chinese city of Urumqi. The UAE, which holds a 40 percent stake in the Pak-Arab Refinery Ltd. (PARCO), has revived the $6 billion Al-Khalifa refinery project. China’s Huanqiu Contracting and Engineering Corp. is mulling installing an oil refinery at Gwadar. So the contours of the Gulf-Gwadar-Urumqi oil supply route are starting to emerge.
Threats such as Rouhani’s can only be addressed if a network of GCC pipelines terminates at Gwadar. China and Arab Gulf states are studying the feasibility of such pipelines, which will secure oil supplies to Pakistan and China, and become home to massive storage depots in case of direct conflict between Arab states and Iran.
During its war with Iraq, Pakistan’s Karachi port served as the supply hub for Iran. Now there is obvious anxiety in Tehran given prospective and ongoing investments by Arab states in Pakistan’s coastal areas.
Gwadar, perfectly suited to dock very large crude carriers, can complement the Gulf’s maritime trade, especially when the Strait of Hormuz is subject to even more congestion. Gwadar’s role as an auxiliary anchorage for oil supplies to Pakistan, China and the GCC’s Asian customers could redefine the world’s economic geography.
– Naveed Ahmad is an investigative journalist and academic based in the Gulf, with a career in writing on diplomacy, security and governance. Besides other honors, he won the Jefferson Fellowship in 2000 and the UNAOC Cross-Cultural Reporting Award 2010. Twitter: @naveed360
