Smelling musk of tr(i)ump(h)

Both seem like men from Mars. But one of them feels that he can lord over the planet’s vast territories, whether land, ocean, or ice. The other one seems like an aristocrat with a grip over the virtual social space, as also the outer space above the earth. The US President Donald Trump thinks that he enjoys economic leverage over most nations, except possibly China. He will ‘Make America Great Again’ and, in the process, force allies and enemies to bow down to his demands, and help him make America great again via tariffs and investments.

Elon Musk, the richest person who is worth $800 billion, more than $550 billion more than the next in line, uses social media, big bucks, and command over outer space to bamboozle investors. Apart from being revered for his achievements, he is criticised for posts that make little sense sometimes, and statements that mislead. Now, both Trump and Musk, the friends-turned-enemies, find themselves in the dock for their economic-business rationale and logic. The president is eating his words, not literally, and Tesla’s owner is being forced to do so.

For decades, since 1979, when a revolution in Iran led to American hostages and an Islamic rule, American presidents wished to destroy Iran, and imposed sanctions on the nation. Now, at the peak of an actual military war with Iran, America eased them. The former can sell the “oil at sea” for 30 days, with the aim to pull down the fast-climbing global crude oil prices. The US treasury secretary, Scott Bessent, posted on X (owned by Musk) that this will bring 140 million barrels of oil into the market, and relieve the pressures on oil supplies.

Politics, not economics, is possibly behind the decision. Although Trump repeated that the global crude prices will not affect the US market, which has enough oil, including hundreds of millions of barrels in strategic reserves. The reality may be snipping at his heels, even biting the calf, as the domestic retail prices of the fuels perk up. If the Iran war does not end fast, and there are not many reasons to believe it will, the domestic situation can have political consequences. Higher fuel prices may anger voters before the midterm polls later this year.

Bessent’s waiver on the sale of Iranian oil, which was posted on the treasury department’s website, allows the Iranian oil to be “imported into the United States under the waiver when necessary to complete its sale or delivery.” However, it is not sure how much of this oil will reach the US shores. Since 1979, America has not imported much oil from Iran. Indeed, some experts contend that not even a barrel out of the 140 million barrels will reach the US. Instead, Trump’s aim is to reduce the existing worries among the Americans, and shore up sentiments.

According to media reports, the “move is expected to benefit Asia, the top buyer of Middle Eastern oil.” In fact, the American energy secretary, Chris Wright, admitted it when he said that Iranian supplies could “get to Asia within three or four days, and hit the market after being refined over the coming month-and-a-half.” This is the third time that the treasury department temporarily waived sanctions in Iran in the past 2-3 weeks, ever since the war started on February 28. The idea is to bring down global crude oil prices nearer to $100, or below it.

One can look at the moves in two other ways. Over the past two weeks, according to Lloyd’s List, 89 ships have crossed the Strait of Hormuz, which is apparently under siege by the Iranians, and a fifth of them were Iranian vessels that carried crude oil. In essence, despite the war, and despite the Strait’s closure, Iranian oil continued to flow. Hence, what America has done in three instances is to legitimise what was happening illegally through smuggling. The waiver is not a waiver, benefit, or help but an acknowledgement of failure.

Another way to look at the waiver moves is to see it from the perspective of the two of the largest global oil consumers, which are based in Asia, India, and China. In India’s case, it may be a matter of helping an ally-turned-foe-turned-ally so that New Delhi inks the bilateral trade deal with Washington without protests. Some of the Iranian oil may reach India, which was among the major buyers before new American sanctions were imposed in 2018. This juxtaposes with the waiver to Russian oil, which was under the western sanctions.

Since the Russia-Ukraine war in 2022, Russia emerged as the largest oil supplier to India, thanks to hefty discounts, until the US put a lid on the supplies. But the temporary waiver has restarted them, and helped relieve the Indian energy crisis to an extent. However, Russian oil is no longer available at discounts, but at premiums to some consumers. One is not sure if the Indian refiners are paying above the market rates. The Russian-Iranian oil may be a carrot dangled by the Americans to push India to sign the trade deal without renegotiations.

How is Musk entangled with oil politics and geopolitics despite Tesla being an electric vehicle, although the satellite-launchers do use fossil fuels? His war with words, or rather way with words turned ugly due to a recent court order. A San Francisco federal court concluded that Musk misled investors prior to his Twitter takeover in 2022. Although Twitter, now X, faces competition from several other social media platforms, it is still popular in most nations. The jury found that many of Musk’s public utterances were intentional, and led investors down the wrong paths. Indeed, Musk may have lowered the acquisition cost.

Before the takeover, the potential owner made claims related to the problems with Twitter’s user metrics, and even hinted that he would back out of the $44-billion deal. These helped him to pare down the stock price by $3-8 per share, which enabled him to pay less to the shareholders. If the order is not challenged and changed, Musk may need to compensate investors in damages due to potential losses. Some lawyers feel that the verdict “sends a strong message. If you move the market with your words, you own the consequences.”

It may be a message to Trump too. If you talk about decimating Iran, time and again, and back the words with missiles and bombs, you will need to own the implications. You may need to ease sanctions.