Iranian Forces Take Iraqi Oil Well

Crude Oil Prices Spike 2% as a Result

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Iranian Forces Take Iraqi Oil Well

Oil prices spiked 2% this morning on news of an Iranian forces advance to take an Iraqi oil well in the East Maysan Oil Field of the al-Fakah region of Southeastern Iraq. Border Guard General Zafer Nazmi reported Iranian forces advanced at dawn and occupied well number 4 in the long disputed region. He said that the Iranians had positioned forces including tanks around the well and remained dug in at last check.

Why would Iran initiate such a seemingly foolish mission?

Just this past week, United States lawmakers pushed forward with legislation to intensify sanctions against Iran. The legislation passed by Congress and awaiting the President's signature is set to include Iran's refined petroleum infrastructure. This "smart sanction" threatens real and significant impact to the Iranian people, who in turn are expected to intensify pressure on their government.

The Iran Refined Petroleum Sanctions Act is basically a negotiation tool, given to the President by Congress. It gives President Obama a hammer with which to threaten use if Iran does not give ground on its nuclear enrichment program. The pending law denies Iran's suppliers of refined petroleum products access to US markets. These suppliers are estimated to control 40% of Iran's refined petroleum needs. That includes gasoline, as Iran is dependent on imported gas.

Thus, Obama has a powerful stick with which to follow up the carrots he's offered to Iran. Iran has rejected the world's offers to this point, though oftentimes using them to stall processes. Iran's answer to UN calls for nuclear concessions has been a clear and resounding "No!" Instead of agreeing to the outsourcing of nuclear fuel, Iranian government officials announced plans to build 10 more nuclear plants and construct thousands of additional centrifuges to process uranium. Also, a recent report in the Washington Post indicates UN and Western officials are analyzing an Iranian technical document that appears to show Iranian scientists evaluating or testing a component crucial to the detonation of a nuclear warhead.

A Silly Response, or a Brilliant One?

This latest action is seemingly so futile that it appears to be the plan of a rogue Iranian general or lower level leader. The Iraqi oil well taken, known as #4, is reportedly not even active; it is no longer being used for oil production. It seems intelligence might have been better for a government initiated action, unless the Iranian measure is simply a test or a show of what could be.

Either way, it will likely be met by overwhelming Iraqi force, assisted by American air cover, if not reversed soon. American forces have not moved as yet, perhaps even considering inaction a more powerful show of force. After all, the Iranian raising of their flag on Iraqi soil looks intentionally intended to draw the ire and perhaps fire of the Iraqis. So America is likely weighing why Iran might want this.

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