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Welcome to The Geopolity’s What We’re Watching (3W), our daily look at the interconnected worlds of Geopolitics, Economics and Energy. Curated from the world’s leading sources of information, our analysis and commentary is designed to help you make sense of the events driving the major developments in the world.
In 3W’s original analysis of the US – Iran MOU, we pushed back against the idea the document was a breakthrough and a first step towards normalization in the Gulf region. Instead, we argued, the MOU was more likely agreed to by the US to buy time – to get vessels laden with oil and gas out of the Gulf via the Strait of Hormuz to restock inventories around the world, and thereby provide the US – Israel Alliance with an opportunity to prepare for a next phase in its War on Iran.
In a conversation with conservative talk show host Michael Knowles last Tuesday, US vice president JD Vance essentially confirmed this analysis as he said that one purpose of the ceasefire was to buy time to refill the world’s oil reserves in order to strengthen America’s hand. “I think what the president has told us to do is use this MOU to sort of refill the world’s oil economy,” Vance said. “And then to see where the hand is”, writes The Maritime Executive.
Therefore, while the US – Israel Alliance tries to drag Iran along in fake negotiations based on the MOU, it works to weaken Iran’s ability to deploy power across the Middle East region.
Earlier this week 3W explained how the Alliance is working in Lebanon in order to defeat Hezbollah. The agreement it brokered between Israel and the Lebanese state serves this purpose. First, it legitimizes Israel’s attacks on Lebanon, casting them as self- defense against Hezbollah. Second, it legitimizes Israel’s continued presence in Lebanon by describing this presence as part of an operation to cleanse Lebanese territory from Hezbollah, Third, it integrates the Lebanese state army into the US – Israel Alliance, making it a tool for Washington and Tel Aviv, designed to manage the disarmament of Hezbollah. And fourth, it sidelines Iran in all this. For this reason, Lebanon’s parliament speaker Nabih Berri, head of Hezbollah’s political arm the Amal Movement, slammed the agreement, writes Reuters. Barri warned the agreement risks “the potential for it to incite internal divisions and draw the Lebanese into a confrontation among themselves”. In parallel, the US is working to get Syria more involved in Lebanon, to relieve some of the pressures on the Israeli military. Syria’s foreign minister visited Beirut on Thursday. Reuters writes that Asaad al Shibani met Lebanese leaders including President Joseph Aoun and parliament speaker Nabih Berri in his first visit to Lebanon since US president Donald Trump raised the possibility of Syrian forces combating Hezbollah in Lebanon. Al Shibaani said that Damascus was open to meeting Hezbollah “if interests require it”.
US vice president JD Vance essentially confirmed this analysis as he said that one purpose of the ceasefire was to buy time to refill the world’s oil reserves in order to strengthen America’s hand
In Iraq a similar development is underway. Since coming into power in May of this year, on the back of US threats that Iran as not allowed to appoint an ally of Iran as prime minister, Iraqi prime minister Ali al Zaidi launched an unprecedented “anti-corruption” campaign, writes Al Jazeera. In one of his first decisions as prime minister, al-Zaidi established the Supreme Sovereign Council for Integrity, Oversight and Recovery of Public Funds, a body intended to tackle the problem of corruption in the public sector and procurement processes. It will be presided over by the prime minister himself and is responsible for monitoring ministries, non-ministerial entities and governorates to prevent the waste of public funds and recover state assets. The optimist would consider this a positive development. The realist, however, notes the context in which this is all taking place, and suspects the push is designed to concentrate power in the hands of US ally Al Zaidi.
The other policies promoted by Al Zaidi support the realist’s assessment as they are closely aligned with US interests in the Gulf region. Al Zaidi is pushing for closer integration of Iraq with the Gulf countries, writes The National, highlighting Iraq’s “Arab” character. This, 3W notes, is a narrative quite clearly designed to counter Iran’s “Persian” influence in Iraq’s economy and political system. Al Zaidi is also aligning with a push by the Gulf states’ main supporter of the US – Israel Alliance, the United Arab Emirates, to establish a crude oil transportation corridor through Iraq and Syria, to reduce the Gulf states’ dependence on the Strait of Hormuz. The National writes Syria has been brought on board with this idea, under which the Emiratis – i.e. the US – Israel Alliance – would be the operator of the corridor. The UAE is further looking at pipelining more of its oil to Oman, to bypass the Strait of Hormuz, while Kuwait has reached out to both Saudi Arabia and the UAE to discuss options how its oil could be pipelined through the territories of its neighbours to bypass the Strait of Hormuz, writes Bloomberg.
In Yemen, meanwhile, the Houthi’s accused Saudi Arabia on Friday of violating the country’s airspace in an attempt to block an Iranian civilian aircraft from landing at Sana’a International Airport, writes Yemen Online. Houthi military spokesman Yahya Saree said Saudi warplanes entered Yemeni skies “to prevent a civilian Iranian plane from landing. The Houthi’s warned of retaliatory strikes against Saudi airports if such actions are repeated. Yemen Online notes the accusation came amid heightened regional tensions, with the Houthis framing the incident as part of Saudi Arabia’s broader campaign by the US and Saudi Arabia to blockade Yemen. This, in the 3W view, could be an attempt to isolate the Houthi’s and prevent them from coordinating with Iran or being supplied by it.
Is Iran aware of all of this? It appears it is…
On Tuesday Iran said its diplomats would not meet their US counterparts for scheduled talks in Doha, Qatar, because the US has not lived up to its commitments under the MOU, writes Nikkei Asia. Iran’s diplomats in Doha only met with mediators from Qatar and Pakistan, and discussed the management of the Strait of Hormuz and the release of the funds the US seized from Iran’s foreign bank accounts, writes Reuters.
Meanwhile, Iran is trying to make use of the current “slow burning” phase of the US – Israel war on it, by also stocking up. In its case, financially. Iran is in talks with Japan to sell more of its oil to Tokyo, now that the US has temporarily waived its Iran oil sanctions, writes Reuters. If Iran could make an agreement with Japan, this would provide Tehran with two important benefits. First, it can probably sell its oil at much higher prices to Japan to to its partner China, as the latter negotiated significant discount with Iran. Second, an agreement with Japan would increase pressure on the US to extend the sanctions waiver beyond the period agreed upon under the MOU, due to the shipping time involved in Iran – Japan crude oil trade.
Meanwhile, Iran is working to build international support for its plan to maintain control over the Strait of Hormuz and to levy fees on ships transferring through it, writes Reuters. Tehran’s negotiators will not move to other areas of dispute in ongoing talks with the US until this has been agreed, sources told Reuters. If the interim deal ends without being extended, Iran will start charging ships for passage in mid-August. Iran is ready to impose its demands on the Strait through force if there is no agreement by other countries to accept its terms, the sources added. Bloomberg writes that Europe has signaled willingness to go along with the Iranian proposal. In a private capacity, officials from Gulf countries have as well, although the official government position of the Gulf states remains that the Strait of Hormuz should return to an “international waterway”. In this debate China has come out saying shipping through the Strait should be “unhindered”. Bloomberg reads the Chinese statement as support for the US position that Iran should control the Strait, but 3W notes the word “unhindered” does not necessarily mean that. It could also mean that China supports Iran position, under which Tehran would ensure traffic is “unhindered” through the provision of safety and environmental services for which ships will have to pay a levy.
Iran is working to build international support for its plan to maintain control over the Strait of Hormuz and to levy fees on ships transferring through it
In the 3W view, what Iran’s current tactics are lacking is a unifying narrative in the direction of the Gulf countries. The US established its military presence on the Arabian side of the Gulf by greatly talking up the “Iranian threat”. If Iran truly wants to achieve a new security architecture in the Gulf, one that permanently sidelines the US – Israel Alliance, it needs to a narrative that counters the idea that Iran is dangerous, seeking to reestablish an empire across the Middle East.
So far, us at 3W have not seen evidence of this narrative developing. If anything the opposite appears to be happening. The Associated Press writes that the casket in which the body of Ali Khamenei has been placed as part of the funeral processes has been draped by a red flag with white calligraphy reading “Ya Hussein”. 3W notes this promotes the idea that the current war is an extension of the Battle of Karbala, at least Iran’s Shi’ite perspective on it. In this perspective, the Sunni Muslims betrayed Islam in Karbala. Perhaps this is not iran’s intention, but the symbolism can easily be understood as evidence that Iran indeed sees the Gulf countries as essentially the same as the US and Israel – enemies. General Ahmad Vahidi of Iran’s Republican Guard issued statements that can further be construed as evidence in support of the US narrative that Iran is an eternal enemy of the Gulf. Vahidi said the enemies of his country “must know that the pure blood of our martyred imam will mark another turning point in the victories of beloved Islam across the global arena,” AP further writes. “They will take to their graves the wish to see this nation surrender. This nation will rise higher day by day through this pure blood.” 3W notes this statement conflates Iran and Islam, which can be understood as meaning that Iran does not see the people of the Gulf countries as Muslims, and thus more-or-less on par with the US and Israel.
If Iran wants to change the geopolitical reality in the Gulf in its favor, it will need to follow up its recent military defeat of the US – Israel Alliance not only with control over the Strait of Hormuz, but also with a unifying message to all the people of the Gulf, and the Greater Middle East region. Without it, the political leaders of this region should be expected to support the US – Israel Alliance plans to weaken Iran. With it, sentiment on the “Arab Street” could limit the ability of these leaders to do so, through which Iran’s position in the region would structurally improve.