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Ahwazi Unrest Threatens Oil Markets - Moody's

A Moody's economist has warned that unrest in Ahwaz (Khuzestan) could send global oil prices soaring.

Speaking to Dow Jones Market Watch, Rakesh Shankar indicated that sabotage of oil pipelines running through the Ahwazi Arab homeland in southwestern Iran is a greater threat than the country's involvement in the Lebanese crisis, which he claimed would "largely be relegated to bombast, rather than any particular action."

"Destabilizing agents within Iran's Southern Khuzestan province, home to the vast majority of Iran's oil reserves, could attack and damage one of Iran's oil targets," he said.

"This is a very real threat, and one that would be immensely destabilizing both to the Iranian government and to oil markets."

Oil installations have been the target of saboteurs since the Ahwazi intifada against the Iranian regime began in April 2005. The Ahwazi homeland holds up to 90 per cent of Iran's oil reserves and represents around 10 per cent of OPEC's total output. Large oilfields have been virtually untapped and represent an important financial resource to sustain the regime in the future - as well as immense power over global markets.

Oil reserves and pipelines in the Ahwazi Arab homelandThe Ahwazi Arabs have paid a heavy price for Iran's greed for oil. In 1925, the autonomous sheikhdom of Arabistan was invaded by the forces of Reza Pahlavi, who went on to overthrow the Qajar dynasty to become the Shah of Persia. Since then, Ahwazi lands have been confiscated, the indigenous Arab culture has been oppressed and the local population has endured war and poverty. Attempts by local members of parliament to redistribute a fraction of oil revenues back to the region have been blocked by hard-liners. Growing frustration has led many Ahwazi Arabs to attack the oil industry, which they regard as the source of their problems and the regime's Achilles' Heel. In their desperation, the Ahwazi Arabs are beginning to realise that regime could to be brought to its knees if oil supplies are disrupted by a relentless Ahwazi intifada, but the rest of the world will also feel the heat.

Some Ahwazi Arab tribal leaders have been politically co-opted and armed by the regime to help guard oil installations. They have an in-depth knowledge of the pipeline infrastructure. If the current ethnic repression continues, it is possible that some members of these tribes will attack the installations they were meant to be guarding.

Sabotage acts have been focused on pipelines feeding the 450,000 barrels per day capacity refinery in Abadan on Iran's border with Iraq. The Abadan refinery represents around 30 per cent of Iran's total refining capacity.

Disruptions to oil supply in Ahwaz on a scale seen in the Niger Delta will have global economic and political implications. Any major attack on Abadan refinery, which represents over a quarter of Iran's refining capacity, or export pipelines from Al-Ahwaz's massive oilfields will hit the country's oil exports as well as its own fuel supplies.

Links

Number of Ahwaz dead rises, oil installations attacked - 19 April 2005
Oil wells sabotaged in Ahwazi Arab homeland - 3 September 2005Iran loses thousands of barrels of oil in attack - 12 September 2005
Iran's oil exports in danger due to rising Ahwaz unrest - 8 March 2006
Second attack on Ahwaz-Abadan pipeline - 21 March 2006