Tensions in the Gulf region normally run high either because of the varying interpretations over Islam or for the control over its oil resources. And so, even as the possibility of a military conflict between the US and Iran caused concern about the humanitarian implications
of another conflict, and what it could do to the prices of crude oil, in India, oil price apart as it is a major importer of Gulf oil, the fallout of a conflict on the 8 million Indians who live in that region and repatriate about USD 40 billion a year, kept New Delhi on the edge.
President Trump was, however, waiting for an opportunity to strike at Iran, after his calling off an airstrike on Iran following an Iranian strike on a US drone and then a presumed strike on Saudi refineries made him look – as he was told – ‘weak’. More so, he had the impeachment proceedings coming and an election thereafter, and thus an Iran orchestrated attack on a US military base near Kirkuk, that killed an American civilian contractor, gave him that opportunity. And even though the US military chief’s offered Mr Trump options from strikes on Iranian ships or missile facilities or against Iranian-backed militia groups in Iraq and what they assumed as a most unlikely option, i.e to assassinate a senior Iranian leader, to their surprise, Mr Trump chose to eliminate General Soleimani.
The assassination of Soleimani, a serving Iranian general and regarded as the most important person in Iran after their leader, Mr Khamenei, had taken many by surprise. The last time the US killed a major military commander in a foreign country, was the Japanese Admiral Yamamoto, in WW-II. But this US attack has now marginalised the US in a region where the big powers have always vied for influence.
Now Iran apart, Iraq and even Turkey want the US to leave the region. And though immediately following the US assassination of Soleimani, the Iranian missile attacks on US bases thereafter, had more symbolic value, than any lethal damage on US facilities and its personnel, both sides used it to pull back from the brink. However, Iran’s 22-missile strike of January 8 was directed at the same base, Ayn al-Assad, from where a US drone had been launched to kill Soleimani. And though the US had initially said there had been no injuries, it later admitted that 11 American soldiers had suffered a concussion and had been evacuated.
Any major military confrontation would have led to a likely spike in Brent crude prices. Apart from Iran’s threats to block the Straits of Hormuz – the narrow sea route through which much of the Gulf’s oil is exported – some observers said that global ‘oil gamblers’ also wanted a rise in prices as they were getting impatient with two uncertainties: one, when the US- now the world’s largest oil producer – would cap its production.
And the other was whether the 23 member OPEC alliance will stick to agreed figures of oil production.
Apart from the impact of the US on oil markets, it is Russia that is the largest non-OPEC exporter of oil. Together they could challenge the influence of OPEC, over the years of course. Countries will thus take sides and align themselves with one of the two major powers in future conflicts. India, interestingly, is still regarded as a strategic partner by them both. However, apart from crude oil, LNG is now a major factor in the Indian hydrocarbon needs and in our economic progress.
Thus, a fractionalized OPEC suits India better, financially, as Qatar is not only a major LNG supplier to India via Petronet LNG, but is also a major foreign portfolio investor (FPI) in the Indian equities markets. It has committed over Rs 40,000 crore in road-building projects. Therefore, Indian diplomats must do a tough balancing act between the US and Russia, and the GCC and Qatar.