by Barnini Chakraborty
Experts say the escalation of the global price war between Saudi Arabia, the world's top exporter, and Russia could cripple many nations outside Saudi Arabia, with Iran topping the list.
The one-two punch of coronavirus and an escalating oil price war that is roiling world markets is hurting one country more than any other: Iran.
Already dealing with a deadly outbreak, the Islamic Republic, heavily dependent on oil revenues, is in no position to deal with the lowest per-barrel prices seen in decades.
CORONAVIRUS: HOW COUNTRIES AROUND THE WORLD ARE REACTING TO THE OUTBREAK"$20 oil in 2020 is coming," tweeted Ali Khedery, a former U.S. official in Iran and onetime Middle East expert with Exxon. "Huge geopolitical implications. Timely stimulus for net consumers. Catastrophic for failed/failing petro-kleptocracies Iraq, Iran, etc. - may prove existential 1-2 punch when paired with COVID19."
Iran's oil exports, its main economic lifeline, have been under siege for quite some time. Experts say the escalation of the global price war between Saudi Arabia, the world's top exporter, and Russia could cripple many nations outside Saudi Arabia, with Iran topping the list.
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Oil prices have plunged 30 percent, the largest one-time drop since the 1991 Gulf War. Now, with oil trading around $30 a barrel, many experts say the price isn't one Iran can survive on.
Saudi Arabia and Russia formed the so-called OPEC+ alliance in 2016 after oil prices plunged. Since then, the two countries have orchestrated supply cuts of 2.1 million barrels per day. The Saudis wanted even steeper cuts, but Russian President Vladimir Putin refused to play along, worrying that it would give American oil producers too much ground.
On Friday, Putin's energy minister, Alexander Novak, said beginning next month, countries could produce as much oil as they wanted. The Saudis, angered by Russia's refusal, said Sunday it would open its spigots and drive down prices.
"If a true price war ensues, there will be plenty of pain in the oil markets," Badr Jafar, president of Crescent Petroleum, a United Arab Emirates oil company, told The New York Times. "Many will be bracing for the economic and geopolitical shocks of a low-price environment."
In no place is that more clear than Iran, which has already been feeling the sting from American sanctions. Export earnings in Tehran have also been drastically slashed and experts warn that a further decline could stretch what little ability the country has left to pay for vital services and security.
"The fall in oil prices could actually have more of an effect on the country than Western sanctions had had over the past several years," says Justin Dargin, a Middle East energy expert from Oxford University.
Aside from the price plunge, Iran is also dealing with the coronavirus, which has morphed from a health crisis into an economic one.
On Sunday, Iran's health ministry reported 49 new deaths from the COVID-19 virus - the highest toll within 24 hours since the start of the outbreak in the country. According to the Centers for Disease Control and Prevention (CDC), about one in every 12,000 Iranians have the virus. The country has the third-most cases behind China and South Korea, though experts fear the country is underreporting the extent of the outbreak in an attempt to hide a desperate situation for which its own leaders are partially responsible.
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Tehran initially downplayed the outbreak because they were worried about low turnout in Feb. 11 parliamentary elections. The low turnout fear was bolstered by the Iranian military's accidental shootdown of a Ukrainian passenger jet in January.
In the end, authorities prioritized their political concerns over the risk of spreading the virus to its citizens. And the move backfired. Big time.
Now the news that a number of lawmakers have tested positive for the quickly-spreading virus - two have already died from it - has ripped away what little was left of the Iranian government's credibility. Officials like Gen. Hossein Salami, the commander of Iran's Islamic Revolutionary Guard Corps., recently went so far as to accuse the United States of unleashing the virus in Iran on purpose.
"Today, the country is engaged in a biological battle," Salami said. "We will prevail in the fight against this virus, which might be the product of an American biological (attack), which first spread in China and then to the rest of the world."
Washington Post Global Opinions writer Jason Rezaian believes many of Iran's current problems could have been avoided but adds that by downplaying the crisis, "Iranian officials have actually managed to aggravate the public panic they wanted to avoid - and have undermined their own legitimacy in the process.
"People are terrified, and they have no trust in the state's ability to manage the crisis. It's hard to blame them," he said.
Bloomberg Opinions columnist Bobby Ghosh believes that Iran has "long regarded reckless endangerment - of its own citizens as much as of neighboring nations - as a governing precept."
"Its reflective tendency to lie about crises, recently on display with the shooting down of a Ukrainian airliner, adds credence to reports that the first signs of the outbreak were evident on Feb. 13, six days before the government owned up," he said.
Iran's Deputy Health Minister Iraj Harirchi downplayed reports of a government cover-up for days and even went on national television to joke about his own symptoms.
In addition to that horrific display, Iranian judiciary chief Ebrahim Raisi said Monday that authorities would be releasing 70,000 prisoners because of the coronavirus outbreak. Raisi did not give details on when or if prisoners, once deemed dangerous enough to lock up behind bars, would be required to return.
Barnini Chakraborty
Source: https://www.foxnews.com/world/iran-oil-price-war-coronavirus-outbreak
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