Trump’s “Isolationism” in the Middle East, Iran and Regional Oil Dynamics

A Glance into the Nascent Trump Administration’s Policies and its Effects on Petroleum Conflicts with Iran

The U.S. has a long history of meddling in Middle Eastern affairs to the tune of energy interests and most of this interference has led to vastly consequential, generational and negative outcomes. In line with the protectionist and isolationist flavor of the Trump campaign, it appears that a critical goal of the current administration is to reduce the energy constituent of American foreign policy. President Trump has inherited a chaotic Middle East from his predecessor and as a result, removing the oil component of the equation would appear to have an overall positive effect. As with everything in the Middle East however, simple logic quickly degenerates in the face of insurmountably complex phenomenon. Both Obama and Bush tried to shape the Middle East in their stratagem in a much more direct fashion than Trump appears willing to engage in, and both ultimately failed. A hands off approach coupled with a lack of energy dependence could supply the tact required to truly influence the region positively. This is an optimistic outlook which is something that should generally be avoided in the region, but this new paradigm of energy independence provides increased capability to react and adapt.

America is projected to become a net exporter of petroleum products with timeline estimates ranging from 2022-2026 and considering the Trump administration’s emphasis on cutting regulation and recent actions supporting domestic petroleum infrastructure, these projections currently appear likely. Despite plans for energy independence, there is still an immediate level of reliance on three OPEC countries from the Middle East (Saudi Arabia being the primary source, Iraq and Kuwait). An expeditious withdrawal of regional American presence is unlikely for these reasons and vital interests such as the strait of Hormuz and contested Iraqi petroleum infrastructure are likely to be aggressively defended in the short term. The reticent outlook of the Trump administration must be understood nominally in regards to Iran where hardline rhetoric and sanctions have laid the groundwork for future aggressive action. How far the Trump administration is willing to deter and combat Iranian influence in the Levant and Arab Gulf presents the most substantial contradiction to Trump’s isolationism. Correspondingly, the destabilizing foreign policy of Iran is the central phenomenon behind regional petroleum conflicts and uncertainty.

Breaking with the Obama administration’s engagement with Iran necessitates an escalation on several developing fronts, vis-à-vis the Syrian and Yemeni proxy wars, Iranian influence in Iraq and OPEC driven oil price fluctuations. The flashpoints of Syria, Yemen and Iraq provide the most consequential nodes of conflict between the Gulf Cooperation Council (GCC) nations and the U.S. in the metric of regional petroleum dynamics. Given the hectic state of the Trump administration with the recent exit of National Security Adviser Gen. Michael Flynn, a strong voice in the administration against Iran, as well as other media-related troubles, direct confrontation with Iran has become more complex. Limiting Iranian aid and influence to proxy forces in Syria, Yemen and Iraq will nevertheless remain on top of the Trump administration’s agenda.

In the case of Syria, the foremost petroleum related issue is the likelihood for pipeline and other such petroleum infrastructure agreements with regional actors. President of Syria Bashar al-Assad put forth a vision for Syrian oil works in 2009 outlining the Four Seas strategy that would empower Syria to be the economic center of Levantine petroleum transportation, refinement and commerce. A deal with Syria’s Sunni neighbors (Turkey, Saudi Arabia and Qatar) was turned down by Assad in favor of an agreement with Iran, Iraq and Syria signed in 2011, but in light of the Syrian civil war the plan was put on hold. 

Since the Astana talks have led to a tenable ceasefire and laid the groundwork for the upcoming Geneva meeting to take place at the end of February, new agreements will concede a clearer picture for the future of Syria and therefore, the premonition of future Syria petroleum projects. Secretary of State Rex Tillerson, has affirmed some measure of commitment to the Syrian opposition in the preliminary, in order to stake out Washington’s voice in the Geneva conference. These efforts are however, for the most part contained to diplomatic annals and while the Trump administration will seek to reverse the strong Iranian presence in Syria, the success of that venture will likely be limited. 

Russia’s petroleum interests in Syria are not to prevent the client Assad regime from utilizing the Four Sea’s strategy, but rather to have a controlling influence on the future flow of Middle East oil and gas into Europe. Maintaining the ability to limit petroleum exports into Europe in the event of a crisis, is the supreme concern of Moscow rather than deciding whether GCC states or Iran/Iraq are the ultimate suppliers. Given the restricted role of Washington in the future of Syrian reconstruction, the Trump administration will exert leverage onto any future agreements by virtue of the American presence in Iraq. Since the U.S. has significant standing in Iraqi governance as well as an immediate interest in the security of Iraqi petroleum infrastructure, American political assets in Iraq provide the most likely instrument in mitigating the Shia crescent across the Levant. Secretary of Defense James Mattis has recently affirmed Washington’s commitment to Iraqi defense against ISIS in the midst of a renewed Iraqi campaign against ISIS in Mosul. This visit of Secretary Mattis to Iraq is under the auspices of Trump’s 30-day period for Mattis to submit a proposal to combat ISIS, which will no doubt be formulated in junction with a Syrian diplomatic strategy.

The U.S. plan to combat ISIS will likely provide a path for a stronger U.S. military presence under a variety of guises that in turn, can be utilized as a foothold to diminish Iranian influence in Iraqi security forces. Defeating ISIS has been the premier component of Trump’s foreign policy both on the campaign trail and during his first month of office and by assuming some degree of success, a marginal increase in Iraqi stability is imaginable. Financial instability and spending cuts to petroleum infrastructure have severely hampered Iraqi oil production; easing the economic and political strain of ISIS occupying Iraqi territory is the key to revitalizing the Iraqi economy. Ramping up U.S. support in the Iraqi campaign against ISIS will increase Washington’s political capital and ability to mold the future of Iraqi governance. Retaining hegemony in Iraqi influence is crucial to not just limiting Iranian-Shia backed militias in Iraq but also in securing petroleum defense that can be a counterbalance to a growing oil partnership with Iran.

Iranian energy interdependence with Iraq, Syria, Turkey and GCC states has been viewed as a stabilizing force for the region and is a must for Iran to fully exploit their petroleum potential. The fundamental logic of that notion is contested by the Trump administration that views Iran as “biggest state sponsor of terror,” and while Mattis has said the Iranian nuclear agreement will be upheld to some measure, economic relief to Iran is antithetical to Washington’s agenda. A tit-for-tat reneging of the Iranian nuclear deal (JCPOA) is undoubtedly in the calculus of the Trump administration and could lead to some form of pressure on American investment in Iran’s petroleum industry. How far the Trump administration will endeavor to resist the growing Iranian petroleum network remains to be seen, but breaking with the engagement of Iran has already left Washington just short of powerless in preventing other nations from staking a claim. Russia and China are the likely contenders to invest in and grow the Iranian petroleum industry and are already doing so, in addition to the Western European deals with Tehran that are in limbo because of American antagonism. Regionally, the most significant unknown is whether or not a thaw of relations can occur between Iran and GCC states and if a détente can spur energy cooperation between these oil giants.

Iranian President Hassan Rouhani has sought lately a dialogue with GCC states and even suggested a halt of general hostility and in the Yemen crisis, all in what is obviously an effort to continue the largely successful OPEC production cut. Coordination like this is extremely tenuous in nature as long as Iran continues proxy aggression in the region, and American isolationism may lead GCC states to accept unorthodox reconciliation in light of losing the military backing of the U.S. The Trump administration’s policies thus far have been contradictory to the campaign rhetoric of reevaluating military support to GCC states and have only showed a commitment to Iranian containment. Regardless of U.S. policy, GCC states retain the ability to control OPEC output where “Saudi Arabia alone could pump another 0.5m barrels a day almost overnight (returning to its pre-cuts levels) and still be 1.7m b/d beneath what it says is its technical capacity.” With a technical victory in Syria, a surprisingly successful campaign in Yemen and a strong foothold in Iraq, Tehran may shift to emphasizing its foreign policy to favor petroleum relations over expanding proxy satellites across the Sunni world.