Norman T. Roule, Energy Expert and Former National Intelligence Manager for Iran, ODNI
Norm Roule is a geopolitical and energy consultant who served for 34 years in the Central Intelligence Agency, managing numerous programs relating to Iran and the Middle East. He served as the National Intelligence Manager for Iran (NIM-I) at the ODNI from 2008 until 2017. As NIM-I, he was the principal Intelligence Community (IC) official responsible for overseeing all aspects of national intelligence policy and activities related to Iran, to include IC engagement on Iran issues with senior policymakers in the National Security Council and the Department of State.
EXCLUSIVE INTERVIEW
The Cipher Brief: Iranian forces recently - unsuccessfully - attempted to seize two oil tankers in separate incidents within a few hours of each other in the Gulf of Oman. The first attack targeted the Marshall Islands-flagged tanker TRF Moss. The second incident involved small arms fire against the Bahamian-flagged tanker Richmond Voyager. Reports indicated that Iranian forces departed only after the arrival of the destroyer, the USS McFaul. What are your thoughts as to why Iran would resume the targeting of commercial vessels in the Strait of Hormuz?
Roule: Iran is unique in its use of routine state-sponsored piracy to project power. In doing so, Tehran demonstrates to its neighbors and the world, that its inexpensive military assets can disrupt commercial and energy shipping in international waters. On some occasions, these operations appear to be retaliation for the Western seizure of Iranian ships that were violating sanctions. Still, it would be a mistake to say that such aggression is only a response to Western action.
Iran engages in these activities because the international community imposes no cost for doing so. Further, the international community has failed to establish a deterrence architecture that would restrain Iran’s military from aggression that falls short of a conventional conflict. Since 2021, Iranian forces have harassed around 15 ships operating in international waters. There is no question that these attacks are known to Iran’s senior-most leadership. And not all of these attacks are bloodless. In July 2021, Iran conducted a two-day drone attack on the vessel Mercer Street, leaving two crewmen, a Romanian and a United Kingdom citizen, dead.
In April of this year, Revolutionary Guard commandos were dropped from a helicopter to seize the oil tanker Advantage Sweet. That Marshall Islands-flagged ship carried 750,000 barrels of oil from Kuwait bound for the United States. Tehran even published a video of the seizure. About a week later, Iranian military speedboats surrounded the Panama-flagged tanker Niovi shortly after it left Dubai and diverted it to Iran. I am unaware of any consequences imposed on Iran for these actions.
It is true that Iran’s forces quickly retreat with the arrival of Western naval assets. But Tehran knows our ships can’t be everywhere and its radar systems allow it to identify vessels that might be captured before Western aid could arrive. Even an unsuccessful attack sends a message to regional and international audiences that it is willing to act so close to NAVCENT’s headquarters in Bahrain.
The Cipher Brief: Some believe Iran’s attacks on shipping could lead to a repeat of the Tanker War of the 1980s. Do you agree?
Roule: I don’t see such a scenario as a near-term threat. The cataclysmic events that shaped the Tanker War of the 1980s, are absent today. Iran’s goals are to seize shipping, to message aggression, and to gain diplomatic advantage. It isn’t looking to precipitate a powerful naval coalition that would inevitably mean a substantial increase in Western forces in the region. Beyond that, it also has no desire to ignite a war with the U.S. that could threaten the survival of the Islamic Republic.
These attacks are dangerous. Imagine a situation in which U.S. forces arrive while the ship is attacked by Iranian forces, and Iranian commandos fire on U.S. personnel. Such an event could precipitate the conventional conflict we all seek to avoid.
The Cipher Brief: Do you believe U.S. and Western policymakers and war fighters are doing enough to control the escalatory ladder during Iran’s attacks?
Roule: CENTCOM and NAVCENT personnel have considerable experience with the Iranian threat and routinely train to respond to these provocations. Further, US policymakers have long worked to avoid a situation where unintended secondary or tertiary consequences of our regional actions could ignite a conflict. For over a decade, a system has been in place to ensure that Iranian provocations are immediately communicated to Washington.
In terms of the latest incident, Department of Defense Undersecretary Colin Kahl described how U.S. policymakers convened a rapid meeting to understand the recent events and issue rules of engagement instructions to the captain of the McFaul. The above said, it is difficult to argue that the current approach to Iran’s actions successfully project deterrence. This is one more example where U.S. strategic goals in the region have become ambiguous.
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The Cipher Brief: Let’s move to Iran’s broader national security strategy. It’s been less than two months since Ali Akbar Ahmadian replaced Ali Shamkani as Secretary of Iran’s Supreme National Security Council (SNSC). Have you observed any indications of a shift in policy or tactics related to Iran’s position towards the US since Ahmadian assumed his new role?
Roule: Iran’s national security strategy has been consistent for some time. The officials who run the country – led by hardline President Ebrahim Raisi and dominated by the Revolutionary Guard – are setting the stage for post-revolutionary Iran.
We are entering crystal ball territory, but this is how I see the situation developing.
The next phase of Iran’s history will likely be familiar, at least in its early years. Iran will be less dominated by clerics and many of its elite belong to networks that protect hardliner and Revolutionary Guard equities.
Tehran will pursue an assertive foreign policy that it believes will position it to be the regional hegemon. Its attitude toward the U.S. and the West will likely be a blend of defiance and engagement aimed at testing red lines and frustrating anti-Iran coalitions. At the same time, Iran will look for opportunities to exploit multipolarity and align its economic interests with Russia and China. Key here will be how Iran can attract the foreign investment and technology that is ubiquitous in the Gulf Cooperation Council.
Domestically, the leadership knows it is unpopular, but I don’t see any sign that it believes the country is so unstable that hardliner ambitions have been fatally compromised. They likely assess that no domestic actor has the political power to threaten regime control. Security forces remain cohesive and loyal. Unrest has been at least temporarily contained and those in Iran who oppose the Islamic Republic lack the leadership and strategy needed to represent a greater threat. I think a broad social liberalization is unlikely, but Tehran’s next leaders may loosen some conservative social rules and even allow greater focus on nationalism and Iran’s pre-Islamic history.
The Cipher Brief: Iran’s Supreme Leader Khamenei is 83 years old. Is there any indication as to who will replace him?
Roule: If we cannot predict who will be the next U.S. President here in the U.S., we should be careful about judgments as to who will lead Iran. Ultimately, for Western policymakers, the issue will be the nature of Iran’s leadership and not the titles of its decision-makers. But if pressed, my sense is that President Ebrahim Raisi sees himself as the next Supreme Leader. But we should also be prepared for the possibility that the death of Khamenei might lead to a leadership architecture dominated by a strong prime minister or more powerful president. A Supreme Leader could exist in either construct with a weaker or transitional actor. Less likely might be that Iran would adopt a fatwa council to guide the government.
The Cipher Brief: What is the current status of Iran’s nuclear program? Everyone wants to know how close it might be to developing to a nuclear weapon.
Roule: Let’s begin with some bottom-line assessments. U.S. policymakers continue to state that there is no indication that Iran is undertaking all the steps needed to construct a nuclear weapon or has even decided to do so. Israel appears to endorse this assessment. But that’s all the good news.
The bad news is that Iran now overtly and routinely undertakes steps that reduce the time required to build a nuclear weapon and harden facilities where such development would likely occur. Tehran has also significantly reduced International Atomic Energy Agency (IAEA) access to its nuclear enterprise.
Keep in mind that any nuclear weapons program has three legs.
First, a weapons program requires fissile material, and Iran’s enrichment efforts show dangerous progress. Iran now routinely produces 20% and 60% enriched uranium and even briefly enriched uranium to the extraordinary level of 83.7%.
Next, a country must launch a weaponization program that turns this material into the actual weapon. U.S. policymakers continue to state that this effort was suspended in 2003, although some dual-use actions may continue.
Last, a weapons program needs a delivery system, i.e., missiles. Here, Iran continues to make significant progress that could accelerate if United Nations missile restrictions are lifted in October. We shouldn’t exclude the possibility that further progress could involve ICBM work that would threaten the U.S. and Western Europe.
Iran doesn’t need to undertake all three efforts at once. Indeed, the smart game would be to think long-term and achieve progress in enrichment and delivery systems before finalizing weaponization. The bottom line here is that it is getting harder to argue that Iran doesn’t look like a country engaged in developing a nuclear weapons program.
In terms of your second question, some analysts believe Iran could construct its first testable nuclear weapon in as little as six months. That is different from a deliverable weapon, and I think we need to be careful offering estimates as to when that would be possible. A timeline for a deliverable weapon depends on the degree of secrecy Iran believes is required for its weaponization program, whether Iran believes weapons systems require multiple tests, and how many weapons Tehran would hope to build before the West detects the program.
The international community’s response has been largely rhetorical and increasingly ineffective. If media reports are correct, the Biden administration may have messaged Iran that we are willing to accept much, if not all, of Iran’s current program as part of a (constrained) baseline for Iran’s civilian nuclear program. I can’t help thinking that as so many previous red lines turned pink, some in Tehran may ask whether our threats of military action - should Iran enrich to 90% - are equally thin.
The Cipher Brief: Iran has been cooperating - somewhat - with the International Atomic Energy Agency (IAEA).How do you see that as part of Iran’s bigger picture and how are you feeling now about the possibility that nuclear talks could be restarted?
Roule: Iran’s cooperation with the IAEA appears aimed at preventing an IAEA Board of Governors condemnation as Tehran normalizes an expanded program along with reduced cooperation. When Iran does seem willing to cooperate with the IAEA, this attitude appears on the cusp of an IAEA meeting. Execution of promised cooperation fades into a fog of conflicting claims as to what was promised, slow execution, and the withheld technical data. Tehran likely assesses that Western policymakers fear meaningful IAEA action could prompt Iran to withdraw completely from IAEA oversight or even the Non-Proliferation Treaty itself.
I think most observers would agree that the organization’s handling of Iran has eroded its credibility at a time when the IAEA is one the few international institutions capable of bringing aggressors to account. We may not yet appreciate the consequence of this problem. The international community has done little to thwart missile and drone proliferation by Iran, but there has always been the belief that neither Russia nor China wish to see Iran acquire a nuclear weapon. It increasingly seems however, that neither Beijing nor Moscow is interested in restraining Iran. If so, the consequences for the long-standing efforts to combat nuclear proliferation could be dire.
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The Cipher Brief: What is the current status of US-Iran talks on nuclear issues and detainees? There have been multiple press reports of talks in Oman and elsewhere. The administration insists no deal is near; Iranian officials claim a deal is within reach.
Roule: Whatever one’s views on the Joint Comprehensive Plan of Action, it is hard to make the case that the diplomatic track with Iran in recent years, has been productive. There is no indication that this will change soon. Other than periodic pro forma comments from Europe that JCPOA remains a workable framework, the idea of a return to the nuclear deal has been dead for months, if not years.
The U.S. administration’s posture is increasingly difficult to understand as anything beyond a strategy aimed at buying time. An issue once routinely described as a crisis requiring months of the most intense diplomatic effort involving senior diplomats, is now described as “no longer a priority.” Senior administration officials argue that diplomacy remains the best approach while simultaneously admitting that Iran shows no interest in meaningful talks. We also can’t overlook that the U.S. diplomatic effort has seen unprecedented turbulence associated with its personnel and relationship with Congress.
There are talks with Iran, albeit episodic, indirect, or via intermediaries. Iran probably also hopes to convince the U.S. and Europe to restart nuclear talks. This isn’t because it plans to offer concessions but because doing so brings the possibility of further Western concessions, splits Western coalitions, shields Iran from pressure on other issues, and provides Raisi a posturing forum to use with his domestic audience.
You are correct that the administration forcefully rejects the claim that a deal has been reached with Iran. Iranian officials have claimed “understandings” have been achieved in which Iran will restrain aspects of its nuclear program. In return, the U.S. will impose no meaningful new sanctions, do little to stop Iran’s sale of millions of barrels of oil that rebuild the reserves that will make future sanctions difficult, and release billions of dollars in funds frozen in Iraq and South Korea for humanitarian purchases. Iran is not required to close facilities or terminate research and development programs.
Evidence to support Iran’s claims of a deal, or perhaps of confidence building measures, may be in the public realm. Neither the U.S. nor Iran have undertaken serious action against the other since March. The U.S. continues to be silent regarding Iran’s oil sales (especially to China), and the administration provided a sanctions waiver to allow Iraq to pay Iran more than $2.7B to cover its debt for gas and electricity debt to Iran. Ironically, Iran reportedly cut Iraq's gas supplies shortly after the payment.
The Biden team is quick to point out that such waivers existed in the past and work continues to obtain the release of U.S. hostages. There is no reason to doubt either statement. But it is also true that payments to Iran for hostages – no matter how disguised – will encourage Tehran to take more hostages in the future. Humanitarian purchases funded by frozen funds mean resources previously assigned for these expenditures will be available for missile and proxy programs.
The Cipher Brief: What is the current status of Iran’s relations with Russia? Is there any reason to believe Tehran may halt its sale of drones and drone technology to Moscow?
Roule: Tehran’s relationship with Moscow continues to evolve into what increasingly looks like a mutually beneficial relationship in support of a handful of military, political, and economic interests. That is different from an alliance, however. Their partnership may be best understood if considered bilaterally and then more broadly. Bilaterally, Moscow and Tehran have cooperated in Syria and at the United Nations, for years.
Russia has reportedly provided Iran with cash and military technology and will probably offer sophisticated aircraft and other weapons. More broadly, Iran appears to see the relationship as part of the disaggregation of the international system into a multipolar dynamic in which its ties with Russia, China, India, and Central Asia play a larger role in its national security. The relationship isn’t perfect. We shouldn’t forget that Iran and Russia are competitors in the global energy market.
The Cipher Brief: How should we look at current relations between Saudi Arabia and Iran? Is there anything new about Iran’s relations with its Gulf neighbors that we should consider? What about tensions between Kuwait and Iran over The Durra gas field?
Roule: Saudi Arabia has undertaken a process of détente with Iran through an agreement brokered (but neither mediated nor negotiated) by China. The definition of this relationship deserves amplification. Détente means that two adversaries will take steps to reduce the likelihood of a conflict that will damage their respective core security interests without doing anything that enhances an adversary’s power. Riyadh’s eyes on Iran are wide open as to the malign nature of Iran’s leadership, but it is demonstrating that it is willing to give engagement a chance and believes the approach will limit drone and missile attacks by Iran and its proxies. Other Arab Gulf countries share this view.
The Durra gas field dispute is a long-standing problem involving the massive offshore gas field shared by Saudi Arabia and Kuwait. The field was discovered in 1967, and ownership disputes existed even then, as Kuwait and Iran gave overlapping concessions to Western companies. The issue wasn’t so important then because gas wasn’t seen as a major part of the global energy market and many Gulf land, sea, and air borders were routinely undefined. But the current interest in the field is simple: It is estimated to hold around 310 million barrels of oil and about 20 trillion cubic feet of gas.
Kuwaiti efforts to negotiate a border with Iran haven’t been productive. Iran (which calls the field Arrash) now claims that as much as 40% of the field lays in Iranian territory and has taken initial steps to exploit its claims. The Saudis and Kuwaitis have called for negotiations, but there is no sign that talks are about to begin. Given Iran's broader equities in the region, I sense that this is unlikely to become a flashpoint. The Saudis and Kuwaitis seek a negotiated solution, but something as important as Durra will take years to sort out.
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The Cipher Brief: At the beginning of 2023, you predicted that the first part of the year would be a buyers’ market for oil, but sellers would dominate the latter half of the year. Are you still sticking with this assessment?
Roule: I think the tightening in physical markets is underway, but it will take some time to convince traders who are more focused on the possibility of an economic downturn and China’s economic problems. This focus is not without merit. Job growth in the U.S. has cooled but persistent inflation makes further interest hikes likely. Combined with growing evidence of a credit crunch, a “higher for longer” rate environment will compound fears of a recession in the U.S. as well as in developing economies.
But the case for oil bears is increasingly being challenged by OPEC Plus production cuts. The most recent cuts by Saudi Arabia, Russia, and Algeria will cause many to believe that the trend towards higher prices will accelerate. The traditional uptick in seasonal demand in the U.S. and the Biden administration’s plans to buy around 6 million barrels to replenish the strategic petroleum reserve will also support prices. This makes it likely that a seller’s market will return in the last quarter of this year or the first quarter of 2024. If so, we are unlikely to see further major cuts by OPEC Plus, and we could even see a production increase in the last quarter. It isn’t unreasonable to think that we could see oil prices in the $90 range at the end of this year.
Geopolitical wildcards will likely dominate over unexpected economic problems. A hard recession in the West is less likely. However, we shouldn’t be surprised by instability in Libya that might temporarily slash exports. Iranian interference with tanker traffic may also increase.
The Cipher Brief: Oil producer unity seems increasingly frayed. What are the factors that stress OPEC Plus unity?
Roule: Looking beyond geopolitical developments, tensions are growing among oil producers on the issue of revenue vs market discipline, price stability vs shared sacrifice, and current revenue vs long-term gains are increasingly apparent. Certainly, it appears that traditional and more recent producers are willing to reject cartel discipline if they believe it risks the revenues required to execute transformational national economic strategies. Producers also live in a world where some believe global consumption will decline and leave them with stranded assets.
The Saudis and other OPEC members used the June meeting in Vienna to project unity. Nonetheless, it is hard to ignore reports of fissures within the group. Friction between revenue-hungry Russia and Saudi Arabia has reportedly been growing. Emirati unhappiness with production restrictions is well known. It is likely that around a third of Emirati production capabilities are unused.
Without a doubt, OPEC decision making must respond to an incredibly complicated array of issues. In addition to historic supply and demand questions, the Russian war against Ukraine has compounded price and market distortions that began with COVID and the 2020 Saudi-Russian oil war. Moscow and Tehran offer deep discounts to overcome sanctions, and Beijing and New Delhi have been aggressive to purchase oil for use, storage, or even resale.
The Cipher Brief: Where does this leave OPEC Plus? Is it possible the cartel has had its day?
Roule: OPEC and OPEC Plus have been counted out several times, only for analysts to be proven wrong. So, I will pass on that question. However, it is fair to say that the group’s decision-making is driven more in Riyadh than in Vienna. The Saudis have been highly effective in their diplomacy and willingness to lead on cuts that preserve their swing producer capacity and maintain market stability. But there are limits to how deep the Saudis can cut production without threatening market share and the fiscal requirements of their Vision 2030 ambitions.
The issue of Iranian and Venezuelan production deserves one more comment. Production and exports from these countries has hit new highs. There are reports that Caracas’ production in the first quarter of 2023 was 15% higher year on year. June exports reached around 800 thousand bpd, an increase over the previous month. Tehran exports in May reached 1.5 million bpd, the highest since 2018.
US production continues to be robust, although investors have maintained a paradigm in which sustained returns vice growth will be the new normal. This will reduce the likelihood of a spike in US oil or gas production.
Another interesting aspect to today’s energy market is the role of such rising producers as Brazil and Guyana. OPEC has been unsuccessfully courting Georgetown and Brasilia for a couple of years. Each resisted joining the group, believing membership would restrict revenue opportunities. Sustaining OPEC’s influence in this environment will be hard work and will shape Saudi diplomatic strategy with such actors as Azerbaijan, Brazil, Brunei, Malaysia, and Mexico.
There is one last story here. Many analysts contend that there needs to be more capital investment in the hydrocarbon sector to meet global demand, even with expanding green alternatives. It is no secret that most OPEC members held quotas they couldn’t meet, partly due to their inability to draw capital investment. The investment by the risking producers I just mentioned should be considered as we think about capital expenditure problems.
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