The US economic siege on Syria and the oil crisis

The recent wave of stringent American measures against maritime petroleum shipping to Syria, the interruption of Iranian “credit line” to Damascus, and the reluctance of Russia to export oil to Syria, might push the Syrian government to liberate the oil fields in the East Euphrates.

The US economic siege on Syria and the oil crisis - GEOPOLITICA.info

Syria is experiencing a severe fuel crisis across the country due to a lack of external supplies resulting from the economic embargo and US sanctions on Syria, beside that Syria has lost its oil production because of war and terrorism, and the Kurdish organizations control of the most of Syria’s oil fields in the country’s northeast.

The effect of the US economic blockade have clearly shown on the life of the Syrian citizen, the United States imposed severe economic sanctions on Syria, including all sectors and vital sectors, and even companies or countries dealing with the Syrian government.

On November 20, 2018, the United States Treasury’s Office of Foreign Assets Control, the Unites States Department of States, and the US Coast Guard issued a new “advisory” to “alert” individuals and entities across the globe of the repercussions of being involved in petroleum shipments to Syria. These measures extended across the shipping industry, including to insurers, shipping companies, financial institutions, as well as vessel owners, managers, and operators. The advisory was updated on March 25 to include a list detailing the names and serial numbers of ships that had taken part in transporting oil to Syria between 2016 and 2018.

The pressure of economic blockade on Syria has worsen after Iran suspended the credit line on last October 15. One major reason behind the halt in aid to Syria was renewed American sanctions targeting the Iranian economy, especially its oil sector, after US President Donald Trump revoked the Iran nuclear deal in May 2018. According to the Syrian Ministry of Petroleum and Mineral Resources, since that date, Syria has not reached any crude oil tanker.

Syria used to produce about 385 thousand barrels of oil per day before 2011, mostly from fields east of Euphrates in the countryside of eastern Deir Al/Zour and Hassaka, and about 21 million cubic tons of gas, mostly from the central region. Production fell sharply to about 24 thousand barrels of oil per day. Syria consumes 4.5 million liters of gasoline, 6 million liters of diesel, and 7,000 tons of fuel oil each day, a total 136,000 barrels of oil per day. Syria’s annual petroleum products bill exceeds $2.5 billion. The country’s oil production, however, is currently just 24,000 barrels per day, down from 385,000 per day in 2010.

Overall estimated losses of this sector over the past eight years, according to official estimates, about 74.8 billion dollars. The most important losses, in the economic sense of any production sector in Syria due to the war. The size of the depletion of oil production has exerted a strong pressure on the Syrian economy in all its details. For the first time, the government allowed the private sector to import its fuel and diesel oil to secure the work of factories and craft enterprises. The step that came into force was an attempt to circumvent US sanctions and access that material but it is certainly not enough.

This was evident with very high prices for selling the material from its suppliers. The sale of diesel fuel was estimated at about 475 Syrian pounds per liter for industrialists according to Damascus Chamber of Industry, which decreased by simple margins due to competition but remained more than double the price at which the government sells diesel oil estimated at 185 Syrian pounds per liter. In dealing with the issue of gas, efforts to double the production of local fields appeared to have reasonable results, especially as efforts continue to improve production according to official statements, while work is being done to import the difference between production and consumption.

According to high level government sources, the Suez Canal Authority prevented the passage of oil shipments from Iran to Syria in response to American pressure. It added to the difficulties faced by shipping companies to reach the Syrian ports in light of the complexities of insurance and fears of Western sanctions that would affect the work of these shipping companies. All these factors led to the suspension of the arrival of any shipment of oil to the Syrian ports for months, while the increased consumption, especially industrial with the return of tens of thousands of industrial and handcraft facilities in Aleppo, Hama and the countryside of Damascus, to double the features of the crisis.

Today, and for the foreseeable future, Syrian vehicles can only purchase 20 liters every five days, while taxis are allowed 20 liters every two days at a subsidized price of 225 Syrian pounds (40 US cents) per liter. Such quantities are, to say the least, very insufficient. Long queues at petrol stations and near- empty streets have become a part of daily life in Syria.

As a solution to end the current oil crisis which putting more pressure on the Syrians in their livelihood and economy, and in this perspective we can understood the words of the Syrian Defense Minster General Ali Ayoub during the high level military meeting, which included the Chiefs of Staff of the Iraqi army, Othman Al-Ghanmi and the Iranian armed forces, Major General Mohammad Jafari, on March 18, and his assertion that the remaining card for the Americans in Syria is the Syrian Democratic Forces “SDF” and “we will deal with it either by reconciliations or by liberating the land”.