The threat was, however, surprisingly weak. The Arabs didn’t give any hint of being worried.
The Iranian comment followed a week in which Japanese, South Korean and Chinese officials all made pilgrimages to the Arab states around the Persian Gulf. Arab officials said one topic of the meetings was how much crude the Arab states could provide if the Asian visitors chose to cut back their purchases from Iran.
Saudi Arabian officials said they could raise their production soon from 9 million barrels a day to 12.5 million barrels a day. That would be a hike of 3.5 million barrels a day. Iran’s crude exports total between 2.5 million and 2.6 million barrels a day.
However, much of Saudi Arabia’s shut-in oil is known to be low quality, heavy, sulfurous crude, not the first choice of many refiners.
The threat to the Arabs was voiced by Iran’s governor (ambassador) at the Organization of Petroleum Exporting Countries (OPEC), Mohammad-Ali Khatibi. He told the Tehran daily Sharq:
“If the oil-producing Persian Gulf states give the green light to replace Iran’s oil, those countries would be the main culprits for whatever happens in the region—including in the Strait of Hormuz. Our Arab neighbor countries should not cooperate with these adventurers.… These measures will not be perceived as friendly.… They will be held responsible for whatever happens. One cannot predict the consequences.”
That was a rather flimsy and weak threat although phrased to try to sound tough. The language did not declare increased Arab oil production to be a “red line” for Iran, as President Obama just told Iran any effort to close the Strait of Hormuz would be for the United States.
The United States is not trying to drive Iran’s oil sales down to zero. But it is hoping to depress them significantly. Just one-third of Saudi Arabia’s shut-in production would displace half of Iran’s oil exports.
The theory is that the Islamic Republic would not make an effort to block the strait if it were still exporting half its oil since that blockage would stop all of Iran’s remaining exports and do it great harm. All of Iran’s crude exports must go through the strait.
The US would probably be quite happy to see Iranian exports cut by 10 percent to 20 percent initially, to send a message, with further cuts coming at later stages if the Islamic Republic continued to be recalcitrant.
Before Khatibi issued his threat, Saudi Arabian Oil Minister Ali an-Naimi said what he has been saying for months—that Saudi Arabia is prepared to pump whatever is needed by the market. His latest statement of that policy was made, pointedly, while Chinese Prime Minister Wen Jiabao was visiting Saudi Arabia.
US Treasury Secretary Timothy Geithner visited China several days ago with Iran one of the items on his agenda. The Chinese pointedly said at the end of the meeting that they would ignore the latest US sanctions on Iran. But China has a habit of publicly rebuffing the United States to demonstrate its independence and then quietly taking actions to try to appease the Americans.