Crimea Offers Iran Use of Its Ports for Oil Transport

Crimea Offers Iran Use of Its Ports for Oil Transport

Publication: Eurasia Daily Monitor

By: John C. K. Daly

The Jamestown Foundation

Both Iran and Russia suffer from the United States’ sanctions: the former since the 1979 Islamic revolution, the latter since its 2014 illegal annexation of Crimea. But in a recent bout of creative synergy, Crimean “deputy prime minister” and the permanent representative of Crimea to the president of the Russian Federation, Georgii Muradov, stated, on August 27, that Iran could avail itself of using Crimean ports for oil transport. Expanding on the theme, Muradov explained, “Iran can use our shipping capabilities […] and carry oil [north across the Caspian Sea, then] over the Volga–Don Canal, via Crimea, to the Black Sea” (TASS, August 27). While the Iranian government has yet to respond to Muradov’s invitation, the appeal of the idea for Tehran is that it avoids a deteriorating maritime situation in the Gulf, allowing Iranian oil to enter European territorial waters without passing through maritime areas dominated by the US.

The fifth Yalta International Economic Forum was held on April 17–20, with the theme “World. Russia. Crimea. New World Reality.” The occupied peninsula’s de facto president, Sergei Aksenov, in response to a question from an Iranian journalist asking why Iranian businessmen were not at the forum replied, “In fact, we have had contacts for five years with Iranian business, the banking system; but things have not yet developed to [be able to] implement practical projects. Accordingly, we invite your businessmen through you. When you return home, tell them what happened here in Yalta and that there is potential for business communications with Iranian entrepreneurs” (TASS, April 19).

Deepening Crimean-Iranian relations are a logical response to the economic isolation produced by international sanctions. Yet, while Muradov’s invitation seemingly adds to the options Iran has for lessening the impact of sanctions, logistics continue to limit the scope of any such trade. The primary bottleneck, at present, is in fact southwestern Russia’s Volga–Don Canal, whose relatively shallow depth precludes the use of large-scale tankers. For decades, Moscow has had plans to build a greater-capacity canal across the North Caucasus, but for now those remain unrealized (see EDM, August 7, 2018; March 26, 2019).

Before the US and the global community intensified its sanctions against Iran, the Islamic Republic sent petroleum primarily through the Suez Canal, to Syria and Turkey. However, the Suez Canal, the traditional route for tankers with Iranian oil, has become increasingly unavailable due to the sanctions. Mediterranean basin–bound Iranian oil must traverse around the southern tip of Africa, the Cape of Good Hope (Splash247.com, September 9). And as Iran primarily relies upon its indigenous tanker fleet, their construction, age and size cause additional problems.

A fully laden very large crude carrier (VLCC—200,000 to 325,000 dead weight tons, with an approximate capacity of 2,000,000 barrels of oil) cannot traverse the relatively shallow Suez Canal. VLCCs, accordingly, either sail through partially laden or first offload a million barrels via the Suez–Mediterranean (SUMED) pipeline (Eia.gov, July 23). But Iranian use of the SUMED is not currently possible, because, in addition to Egypt, one of the pipeline’s owners happens to be Saudi Arabia—an enthusiastic supporter and enforcer of sanctions against Iran.

For all of the above-named reasons, for the moment Iran will have to continue to export the bulk of its shipments via the Strait of Hormuz, where the US military is increasingly ramping up its presence. China, one of Iran’s major energy export markets, has made clear that US sanctions will have no impact on its purchases. On June 28, in Vienna, Chinese foreign ministry official Phu Tsun said that Beijing does not recognize Washington’s total ban on oil imports from Iran, telling reporters, “We reject the unilateral imposition of sanctions. Energy security is important to us; oil imports are important to energy security and the lives of citizens. We do not accept the so-called ‘zero’ US policy” (Vesti Ekonomika, June 28).

The Donald Trump administration’s trade dispute with China has now overlapped with its Gulf maritime policies. Washington has for decades considered the waters surrounding the Arabian Peninsula critical to its national security. In the wake of the Iranian Islamic revolution, the US government developed what came to be known as the “Carter Doctrine” (1980), committing the US to use the military to defend its interests in the oil-rich Gulf.

This past summer, the secretary of the Security Council of the Russian Federation, Nikolai Patrushev, announced that Iran had proposed a permanent international mechanism to combat sanctions. The Russian government supports the proposal in principle, Patrushev stated, but nothing concrete has yet developed (Krpress.ru, August 30). In the meantime, both countries share an interest in maximizing their exports, while lessening the impact of punitive international economic measures.

It is in this context that the Crimean option would give the Iranian oil industry greater space to maneuver. According to analysts, Iran’s oil exports fell from 2.5 million barrels per day in April 2018 (prior to Washington unilaterally pulling out of the Iran nuclear deal) to 0.5 million barrels at present, due to the resulting reimposition of sanctions (RT, August 31). Moreover, the US Energy Information Administration (EIA) notes that, over the course of the first quarter of 2019—the first full quarter since sanctions on Iran were reimposed, in November 2018—Iranian exports declined by 1.2 million barrels per day (Eia.gov, July 17).

With the US trying to put together a new coalition of countries in the Gulf to counter what it sees as a renewed maritime threat from Iran, Crimean Deputy Prime Minister Muradov’s offer is undoubtedly receiving close scrutiny in Tehran. Whatever the eventual outcome of the “Crimea option,” one of the net results of the current US-led sanctions policy is to drive Russia, China and Iran ever closer together to defend their economic interests. And this development is notably immune to pressure from carrier task forces.

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Photo source: The image uploaded from the original article by The Jamestown Foundation comes from: (source: sputnik.com)

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