U.S.-Iran Oil Crisis: What It Means for Both Countries and the Rest of the World

Iranian forces have claimed the seizure of a small tanker accused of illicitly carrying oil through the Persian Gulf, the latest incident in a series of tense developments that demonstrate a shifting balance of global power.

The Islamic Revolutionary Guard Corps' (IRGC) official news agency issued a statement Thursday confirming that their naval patrols seized "a foreign vessel caught in the act of carrying one million liters of smuggled fuel" Sunday south of Larak Island, near the Strait of Hormuz. The ship was said to have had a capacity twice that of the amount of oil confiscated and a crew of twelve, all of whom have been detained.

Though the name or flag of the ship was not identified, footage later aired by Iran's semi-official Press TV identified the ship as Riah, a UAE-based, Panamanian-flagged oil tanker reported to have disappeared Saturday off the coast of Iran's Qeshm Island, which neighbors Larak. The Iranian Foreign Ministry later said Tuesday that the Revolutionary Guards rendered assistance to an unidentified vessel in the area and Thursday's statement denied "Western media claims that any other flotilla was seized by Iran in recent days."

Facing mounting U.S. sanctions and military threats, the Islamic Republic has consistently vowed to defend itself and secure the waters of the Persian Gulf, even as the Pentagon claimed Iranian forces were actually behind attacks on commercial vessels. Esfandyar Batmanghelidj, founder of Bourse & Bazaar, which tracks developments in Iran's economy, said that, amid this geopolitical backdrop, Iran's latest move served dual purposes at home and abroad.

iran navy oil tanker gulf
Iranian forces take part in "National Persian Gulf Day" near a commercial vessel in the Strait of Hormuz, April 30. A third of the world's maritime oil traffic passes through the crucial chokepoint, which is at the center of U.S.-Iran tensions. ATTA KENARE/AFP/Getty Images

"The IRGC's seizure of a foreign tanker engaged in smuggling activities sends a message to both domestic and international audiences," Batmanghelidj told Newsweek. "For the Iranian public, the IRGC gets to demonstrate its commitment to combatting what its leadership has called the 'seven-headed dragon' of smuggling. For the international community, the seizure, if confirmed, serves as a statement of capability."

"By targeting an obscure, small vessel and by leaning on the smuggling allegation, the IRGC is likely trying to demonstrate capabilities without triggering a new security crisis," he added. "It's another gamble."

The long-troubled U.S.-Iran relationship has once again approached a crisis point reminiscent of the tanker wars of the 1980s since President Donald Trump's decision last year to pull out of a 2015 nuclear deal that promised Tehran sanctions relief in exchange for agreeing to curb its nuclear activities. Despite the International Atomic Energy Agency repeatedly verifying Iran's compliance and the continuing support of fellow signatories China, the European Union, France, Germany, Russia and the United Kingdom, the U.S. has increasingly restricted Iran's economy since the unilateral exit.

The U.S. has accused Iran of backing militant groups across the Middle East and of threatening regional stability with its ballistic program. While Iran has always denied seeking nuclear weapons, it has vowed to continue developing its missile arsenal in order to defend against the U.S. as well as its regional allies such as Israel and Saudi Arabia.

us navy persian gulf
A formation of Avenger-class mine countermeasure ships USS Devastator, USS Gladiator, USS Sentry and USS Dextrous maneuver in the Persian Gulf, July 6. The Pentagon has boosted its military presence in a region with a bloody history of U.S.-Iran encounters. Antonio Gemma Moré/U.S. Naval Forces Central Command

The Pentagon has recently begun to bolster its own military presence in the region, claiming Iran posed a heightened threat to Washington's interests there and later blaming the country for two series of attacks May and last month on commercial oil vessels in the nearby Gulf of Oman. Iran has dismissed these allegations, but the Revolutionary Guards did later claim the shootdown of a U.S. Navy spy drone they claim breached Iranian aerial territory⁠—a move that led Trump to nearly conduct airstrikes as the Pentagon claimed the unmanned device was in international airspace.

Though the U.K. has joined other nuclear deal parties in calling for de-escalation on both sides, Royal Marines stormed an Iranian supertanker earlier this month they accused of transporting oil to Syria via Gibraltar, an apparent violation of EU sanctions. Iran has threatened to retaliate, though it denied U.S. claims of a subsequent incident in which the Revolutionary Guards allegedly approached a U.K. oil tanker only to be driven away by an escorting warship.

Securing the flow of oil through international waters has been at the center of recent unrest in the Persian Gulf. Rockford Weitz, president of the Institute for Global Maritime Studies and director of Fletcher Maritime Studies Program at Tufts University, said there are "few things that unite the world more" than this, but told Newsweek why the current crisis has left major powers divided.

"There is no question that pulling out of the Iran nuclear deal caused instability in the region, generally speaking, and put U.S. diplomacy on the offensive," Weitz said, adding that, at the same time, if Iran was behind explosions targeting Norwegian, Japanese, Saudi and UAE vessels in the Gulf of Oman, Tehran's strategy "backfired in a significant way and did not have the desired outcome."

strait hormuz oil traffic chokepoints
A graphic displays some of the world's most important chokepoints for maritime oil traffic, with the tense Strait of Hormuz hosting the flow of some 16.8 million barrels a year. STATISTA

Iran has already raised the stakes by suspending some of its commitments to the nuclear deal in response to Europe's failure to normalize trade ties as outlined in the agreement. Though the EU recently announced a special trade vehicle designed to facilitate transactions with Iran, these were so far largely limited to humanitarian products, not lucrative industries like oil, and Iranian officials have begun enriching uranium beyond restricted levels.

Still, the nuclear deal countries have not triggered a dispute resolution mechanism outlined in the accord. Instead, they have called for strengthening the EU-Iran trade channel and have called on Iran to again comply, while condemning U.S. sanctions that have further isolated Washington from its transatlantic partners who have been repeatedly sidelined as the Trump administration pursued an "America First" foreign policy.

Weitz told Newsweek that, while in past years the U.S. may have quickly been able to form "a grand coalition" of maritime forces against Iran, such unity has yet to manifest itself for three reasons: "the way Trump treats his traditional allies," his "pulling out of the nuclear deal" and the fact that "the urgency of NATO allies is less because of changes in the general flow of oil." These three developments have also led to other rising powers such as China, Russia and Japan taking a much more prominent role in international affairs, especially as Europe faced domestic political turmoil.

"The actual kind of real story behind the day-to-day headlines here is that this is what a multipolar world looks like," Weitz said, calling the days in which NATO alone dominated global security affairs "a part of history."

U.S.-Iran Oil Crisis: What It Means for Both Countries and the Rest of the World | World
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