Iran and global energy insecurity

Some in Congress were uneasy about the nuclear deal with India. Rice had to spell it out for them:

"Diversifying India's energy sector will help it to meet its ever increasing needs and more importantly, ease its reliance on hydrocarbons and unstable sources like Iran. This is good for the United States," she said in testimony to the House committee.

Translation: allowing India to go nuclear helps the U.S. isolate Iran. Like it or not, India's energy security needs are constraining U.S. foreign policy.

India's Oil Minister Mani Shankar Aiyar said on March 10 the U.S. Ambassador, David Mulford, met him to express concern about India's plan to import gas from Iran through a pipeline.
``We have noted what U.S. concerns are,'' Aiyar said. ``I think the U.S. is well aware of our energy requirements. So far we are sensitive to each other's requirements.''

There's also, China's reliance upon Iranian oil.

... the success of any UN action against Iran hinges on Beijing's support, as it is one of five permanent members of the UN Security Council with veto-yielding power. And China ... just happens to be searching for new energy reserves to drive its booming economy.
Iranian Petroleum Minister Bijan Zandaneh told China Business Weekly recently that Tehran wants China to replace Japan as the biggest importer of its oil and gas. "Japan is our No 1 energy importer due to historical reasons, but we would like to give preference to exports to China,"

The current multipolarity of the current geopolitical tango over Iran demonstrates a limit of influence afforded by U.S. military dominance. Globalization has meant that economic dominance does not provide unilateral power, as mutual economic interdependency means that it is at best difficult to prevent shocks in one economy from spilling over into other economies. This is not all negative. This interdependency has also meant that it was in the interest many countries to supply the U.S. with refined oil products after Hurricane Katrina hit in 2005.

A group of 26 countries, including the United States, yesterday agreed to release oil, gasoline or other petroleum products from their emergency reserves in an attempt to bring down soaring prices and avert domestic shortages.

Still, this complicates dealings with Iran. A cutoff of Iranian oil supply or an Iranian blockade of the Persian Gulf (denying passage to other countries' oil transport vessels) would impact Europe, India, and China, forcing them to go elsewhere on the global energy market to meet domestic demand. The resulting economic impact upon the U.S. would be quickly felt. The recent Oil Shockwave simulation, though targeting different scenarios (publicly, at least), has negative implications for the situation with Iran.

The underlying situation dramatized in the exercise -- and accepted by most energy analysts -- is that tolerances are so tight between supply and demand, that even small disruptions in the delivery of oil and natural gas can cause cascades of unpleasant developments.
The war game contemplated that when oil prices spiked and the Cabinet met to consider its options, it realized it had almost no clout to influence events.