The Effect of Oil Prices on Iran and Nuclear Talks

On December 22nd, 2014, Mehrdad Balali of Reuters (and published on Yahoo) wrote an article entitled ‘Budget Pressure Unlikely To Deflect Iran From Nuclear Goals.’ In the piece, he discusses the falling oil prices, and the impact that this may have on Iran’s economy. However, despite Iran’s reliance on higher prices, he wrote that the “economic pain is unlikely to soften its stance in nuclear talks or end aid to allies such as Syria, matters seen by its ruling clerics as strategic priorities.”

He argues that the reason for this had to do with Ayatollah Ali Khamanei. Namely, security issues are funded from the Ayatollah, and thus, may seem to be somewhat more resistant to fluctuations in oil prices. 

And despite the falling prices, the nuclear program seems to be a top priority for Iran, along with their support for Syria. Balali quoted a senior-level Iranian official, who said “”Our support to our brother Assad will never change,” said a senior Iranian official, referring to Syrian President Bashar al-Assad. “Because of (declining) oil prices we face economic hardship … but we will mange to continue our support to Syria, militarily and financially.””

This is an important point, as it shows that despite drops in economic resources, that states prioritize top issues, and in this case, Iran’s continued moves towards a nuclear program, as well as towards supporting Syria.

With these negotiations, and all negotiations in international relations, it is important to look at the various actors and their interests. Here, the Ayatollah has the majority of weight in Iran’s governing structure. And while President Hassan Rouhani’s voice matters, it is clearly overshadowed by Ayatollah Khomenei.

However, there are other actors that also have an important voice. For example, in the case of Iran, the Revolutionary Guard Corps, who are under the Ayatollah, have also been skeptical of nuclear talks (Balali, 2014). And this seems to be why Rouhani needs to appease the RGC, and when they are happy (such as being so with their budget), in turn might be flexible with regards to nuclear talks (Balali, 2014).

It is necessary to monitor how the different interests in Iran are interacting with regards to nuclear talks and Syria, and particularly as we monitor international oil prices.