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Daniel J. Graeber

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Iran Tries Brotherly Love in the Persian Gulf Oil Game

Posted: 03/22/2012 10:43 am

The Iranian government said if its diplomatic efforts with its "brother," the Kuwaiti government, didn't bear fruit, it would work to develop a shared oil field by itself. Iran, which ranks among the top 5 of OPEC oil producers, claimed it was getting more oil out of shared fields in recent years. Yet, with Kuwait allied with the United States and working more closely with Iran's long-time rivals in Riyadh, it's unlikely there will be any brotherly love in the Persian Gulf anytime soon.

Iranian authorities announced they were hoping "positive diplomacy" would convince the Kuwaiti government to work bilaterally in the Arash/Dorra oil field in the Persian Gulf. The reserve capacity of the field is estimated in the hundreds of millions of barrels and Tehran claims production in shared oil fields had increased about 10 percent compared to the last calendar year. If Kuwait didn't reciprocate, Iran said, it would go it alone in its portion of the oil field.

Dorra, as the Kuwait side of the oil field is called, is governed by the terms of a joint venture between Kuwaiti and Saudi oil companies, however. Both sides are moving closer to the preliminary steps needed to develop the field. Iran and Kuwait, for their part, can't seem to agree on a maritime border and while Tehran may, on paper, consider Kuwait to be its "brother," nothing could be further from the case with its relationship with Riyadh.

In 2009, long before the Arab Spring, Iran was accused of providing military assistance to Houthi rebels, a Shiite opposition group in Yemen. Conflict in northern Yemen had threatened to spill over across the Saudi border shortly thereafter, suggesting a proxy war was on the horizon. Nearly three years later, Riyadh tried to pin the blame for unrest in its oil-rich Eastern Province on the Iranians.

Now, apart from a steady series of military drills in and around the Persian Gulf, Tehran appears to be using oil and natural gas as a tool to gain political capital in the region. Pakistan has already bucked U.S. sanctions through its support for a natural gas pipeline from Iran. Survival is proportional to power and Iran may be working on the margins of its diplomatic circle in an effort to sustain any sort of regional dominance. Islamabad is already frustrated with its U.S. partnership in part because of counter-terrorism operations in the region. But Kuwait is a largely Sunni state that counts the United States as an ally. Last year, the kingdom traded jabs with Tehran over an alleged spy ring so it's doubtful that energy will heal any wounds. While Iranian crude oil continues to flow in the world market, the Islamic republic likely faces isolation in the Arab world.

Daniel Graeber is a senior journalist at the energy news site Oilprice.com. He is a writer and political analyst based in Michigan. More of his articles can be found on his Authors page at Oilprice.com

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