Before US President Donald Trump tore apart his predecessor’s Iran Deal in 2018 and reimposed sanctions on Tehran, the mean average rate of recovery across all of Iran’s oil fields was 5.5 percent. According to Oil Price, it has now dropped to 4.5 percent following the end of the Joint Comprehensive Plan of Action.
Enormous Economic Pressure on Iran
The Iranian Government is under pressure to boost economic activity again following Trump’s sanctions. Supreme Leader Ali Khamenei recently disqualified most of the reformist candidates standing in his country’s parliamentary elections on February 21, in a bid to improve support for his regime. This is because he knows that US sanctions have upset the Iranian economy and could lead to a surge in support for reformists. This would weaken Khamenei’s grip, too. Therefore, the timing of the government’s latest announcement is no coincidence.
Iran’s Plan to Boost its Energy Industry
Iran’s Petroleum Minister Bijan Zanganeh declared he is awarding a $1.3 billion contract to improve oil recovery at two onshore oil fields in Khuzestan to Iran’s main infrastructure company, MAPNA Group. The Government plans to increase its own mean average recovery rate to 25 percent within the next three years.
There are many ways that this plan could work. The Islamic Republic has access to the oil and engineering expertise of China and Russia, two nations which have friendly relations with Iran and did not follow Trump’s lead in reimposing sanctions on Tehran.
Siemens also has a good relationship with MAPNA and recently signed an agreement to manufacture F class gas turbines in the country. If the MAPNA Group succeeds in boosting Iran’s oil recovery, it will be a devastating blow to the US President’s strategy for the country, which was also damaged by the Senate’s triumphant bid to restrict Trump’s war powers.
Rouhani: Tehran is in a ‘Better Situation’ Than Last Month
At a press conference last Sunday, Iranian President Hassan Rouhani mocked the US President’s bid to apply maximum pressure on Iran. Though he acknowledged that Trump does not want war with his nation, Rouhani said that Tehran is in a “better situation” than it was last month. Furthermore, Rouhani stated that he is aware that declaring war on Iran would jeopardize the Republicans’ chances of winning the 2020 election.
Trump has few options left to him to apply maximum pressure on Iran and his weakness on this issue could be something that plays into his opponents’ hands, especially if Joe Biden or Pete Buttigieg win the Democratic nomination. Both candidates have foreign policy knowledge and experience that matches Trump’s.
Despite this, Trump has succeeded in scrapping the Joint Comprehensive Plan of Action (JCPOA) and he ordered the assassination of Qasem Soleimani last month.
Time for Iran and US to Take Macron’s Deal?
However, the time has come for both the US President and Rouhani to consider the option of an expanded deal outlined by French President Emmanuel Macron.
Macron has working relationships with both leaders. In September 2017, he raised the possibility of expanding the Iran Deal to incorporate Iran’s ballistic missile program. He also produced a four-point document that would ensure the US lifts all of its sanctions against Tehran. The text stated that both sides would have to comply with the agreement and the Islamic Republic would have to end its destablization activities in the Middle East.
It is an ambitious plan and if Rouhani and Trump can agree on a precondition for their meeting, like the partial lifting of US sanctions, it could be a success for both sides, especially for an American President who is facing the polls this year.
Trump claims to be a man who understands the “art of the deal.” But at some point he must sit down with his Iranian counterpart and thrash out a new agreement if he wants to prove that true.