In this photo released by an official website of the office of the Iranian Presidency, President Hassan Rouhani, right, welcomes Chairman and CEO of France's Total SA Patrick Pouyanne for their meeting at his office in Tehran, Iran, Monday, July 3, 2017.
In this photo released by an official website of the office of the Iranian Presidency, President Hassan Rouhani, right, welcomes Chairman and CEO of France's Total SA Patrick Pouyanne for their meeting at his office in Tehran, Iran, Monday, July 3, 2017.

Last week, in the midst of the ongoing feud threatening the fragile peace in the Arab-Persian Gulf, two major announcements reshuffled the cards of regional – if not global – energy security.

On Tuesday, Qatar announced a 30 percent hike in its output of liquefied natural gas over the next five to seven years. This decision by the country that is already the world's largest producer of LNG will further increase the developing supply glut, pull prices down, and seriously harm the balance sheets of energy companies, particularly those in North America.

The announcement was not the only blow to Donald Trump's hope for American energy dominance as it came just one day after French oil company Total S.A. signed a historic agreement with Iran – by far the most important investment contract since the nuclear deal and the lifting of sanctions. This contract foresees the development of phase 11 of "South Pars" , the largest gas field in the world, straddling Iran and Qatar.

With this decision, Total became the first Western oil company to reinvest in Iran two years after the lifting of sanctions against the country in 2015. The contract allows the French major to own 50.1% of a consortium gathering the Chinese national company CNPC (30%) and the Iranian company Petropars.

Evaluated at 4.8 billion dollars, this investment provides Iran with a much needed financial boost and demonstrates the positive output of the nuclear negotiations and liberalisation of its economy. It also offers a breath of fresh air to President Hassan Rouhani, re-elected on the promise that the opening of the country he advocates for, would lead to a steady improvement of the country's economy thanks to an expected $50 billion in foreign investment. Yet, several years after his arrival to power, investments have remained scarce, in particular due to the fear of retaliation from the United States.

Among the opponents to the deal were also the hard liners of the Iranian regime who intensified their criticism of the president in recent weeks and operated in the background to solidify the control of the Revolutionary Guards over part of the economic apparatus.

During the last decade of sanctions, the Pasdarans, or the Iranian Revolutionary Guards, had taken advantage of the isolation of the country to strengthen their positions in key sectors, especially those of construction, oil and gas. Not surprisingly, Iranian oil companies linked to the Revolutionary Guards continuously insisted on managing its oil and gas industry autonomously without the participation of a foreign company.

But as Iranian oil minister Bijan Namdar Zanganeh confirmed, the country does not have the money nor the technological knowledge to develop a natural gas field that can place Iran back at centre stage of energy geopolitics. Total, whose technological know-how had already proven essential in the development of the Ras Laffan LNG production site at the heart of the Qatari wealth, was the ideal partner for Iran.

Despite American sanctions, the French company has always maintained a presence in Iran ensuring the company a leg up in recent negotiations ahead of Shell or ENI.

Both the Iranian government and the French company stand to win in this deal. Total hopes that this agreement will open up other "opportunities" in Iran's oil, gas and petrochemical sectors. Tehran is home to the second largest gas reserves, after Russia, and the fourth largest oil reserves in the world, the potential for Total is immense. From the Iranian government's perspective, the hope is that the smooth arrival of Total will encourage other western and Asian companies to take the plunge and invest in Tehran.

This signing comes despite the hostility of Washington that hampered the normalizations of Iran's economic relations with the rest of the world, notably because of the reluctance of the big international banks to work with Tehran for fear of punitive measures from Washington.

The US Senate voted in mid-June to adopt new sanctions against Iran. While the law still needs to be examined and adopted by the House of Representatives and signed by President Trump, it has already been described as "illegal and illegitimate" by Tehran. Yet as the Total deal confirms, European companies are now willing to take the risk to enter a country in high need of infrastructure and international partners.

Even in France where America's wrath culminated in a 9 billion dollar fine to the French banking juggernaut BNP Paribas in 2014, the watchword is to lead and take initiative. As Patrick Pouyanné, CEO of Total, declared in a clear allusion to the Trump administration during the signing ceremony, the objective of Total is to build bridges, not walls.

From a geopolitical perspective, these recent developments in the regional energy exchequer underline two major shifts. First, France confirms its emergence as an assertive power who is ready to stand up to the Trump administration on energy issues. From the confrontation on the Paris accord on climate change to geopolitical initiatives in the Middle East, Emmanuel Macron is ready to defy the Americans.

Second, Qatar and Iran simultaneously seem to have caught Saudi Arabia at its own game. When Saudi Arabia decided to disregard its quotas on oil production and to engage in an oil price war, authorities in Riyadh were aiming at curbing the policies of the Obama Administration that they perceived as turning its back on them.

Now Qatar and Iran have adopted the same tactic by increasing prospective LNG production and cutting the margins of American producers, showcasing the impact their energy policies can have all across the US.

Energy is a powerful weapon of influence and both sides of the Gulf conflict are ready to use it.