Iranian lawmakers this week expressed support for a measure that would beat the European Union to the punch by cutting off oil exports before the summer. Tehran's measure amounts to a statement of economic warfare to some degree as the European economy continues to drag on the rest of the global market. Yet, if Iran is shipping only 20 percent of its oil to European markets, its more than likely the Europeans would be able to weather the storm.
European lawmakers voted to ban any new crude oil export contracts with Iran and put existing contracts on hold as part of the cat-and-mouse game over Iran's perceived nuclear ambitions. Iranian lawmakers, for their part, said the Europeans might not have to wait very long because Tehran could cut oil exports first, so there! Iran exports about 2.2 million barrels of oil per day, or roughly 20 percent of its total output, to European consumers. The last time a significant volume of crude was cut off from the world market, the International Energy Agency stepped in with strategic oil reserves. This time, however, Iran, considering its penchant for touting its vast consumer base, will likely send that 20 percent somewhere else.
Cue Riyadh. Saudi Arabia, certainly no friend to the Iranians, said getting more oil to the markets in the event of Iranian crude oil shortage is simply a matter of turning the proverbial knob to 11, though in this case, the sustain relates to a stable oil market. Riyadh already gave assurances to South Korean leaders this week that Seoul could easily get by without Iranian crude.
But what about Europe? Europe needs to worry about higher oil prices like a dog needs fleas. The International Monetary Fund, in a report from January, warned that a halt of Iranian crude oil exports to the Eurozone would push oil prices up as high as 30 percent. A European economy, where a lingering Greek debt crisis drags on world markets almost as predictably and with as much regularity as the bell rings at 9:30 am on the New York Stock Exchange, can't stomach a $20 or so increase in crude oil prices. Yet, the IMF said the shock wouldn't last long as "other producers or emergency stock releases" bring some relief "over time."
Iranian President Mahmoud Ahmadinejad was summoned before lawmakers this week to answer questions about his economic policies. While that's likely an issue leftover from when one of his top aides was accused of sorcery, of all things, it may be an indication Iran is starting to feel the economic pinch. Tehran, for what it's worth, is already forced to play three-card monte in order to get India to pay for its crude oil shipments. Sure, the Iranians are good at the diplomatic game, playing ball with weapons inspectors just enough to keep working on *ahem* medical isotopes. But the world has more or less brushed off Iran's threats to close the Strait of Hormuz, so if Tehran doesn't want to play nice with the Europeans, fine, let them pout.
Cross posted with Oilprice.com
Daniel Graeber is a senior journalist at the energy news site Oilprice.com. He is a writer and political analyst based in Michigan. More of his articles can be found on his Authors page at Oilprice.com
Follow Oilprice.com on Twitter @OilandEnergy and join us on Facebook.
To stay on top of important articles and research with our free private members service, sign up to the Oilprice.com Intelligence Report here.
Follow Daniel J. Graeber on Twitter: www.twitter.com/oilandenergy
More nonsense with no facts to support his insinuation. It's this type of reckless "journalism" or intentional propaganda that is creating this faux crisis. The U.S. intelligence agencies still believe that Iran has not restarted their weapons program.
However it goes, there will not be a shortage of oil but the oil prices will again skyrocket in the US thanks to the petroleum industry.
It doesn’t matter that the oil import into the US is minor; the speculators set the oil prices. I wonder who the speculators are.
I have no love lost for this Iranian regime , but you know what? They are standing in front of the beast and not caving and I have respect for that.
Wind, solar, wave energy, geothermal and second generation biofuels made from algae, cellulose and waste are the future. Every landfill in the world can now be set up to produce energy. That waste can be turned into biofuel, energy (methane) and raw materials for new products. We need to move to a more sustainable model and reduce our dependence on OPEC oil. Our economic security and national security depend on it.
So, what are sanctions, chopped liver?
Assuming 2.2 bopd to Europe equals 20% its output, Iran would be producing 11 bopd, ahead of Russia and KSA.
I'd put my money on the sun and solar energy. What a source of power! I hope we don't have to wait until oil and coal run out before we tackle that."
Thomas Edison
In conversation with Henry Ford and w:Harvey Firestone (1931);
as quoted in Uncommon Friends : Life with Thomas Edison, Henry Ford, Harvey Firestone, Alexis Carrel & Charles Lindbergh (1987) by James Newton, p. 31
Dude the embargo on Iran isn't economic warfare?
http://viableopposition.blogspot.com/2011/12/iran-oil-giant.html
Iran will still be able to sell huge volumes of both commodities to China (and India) and, more importantly, it is these two nations that will be the drivers of the world's economy in the coming decades.
Once Iran ceases its nuclear weapons program, China will certainly continue its energy development partnership with Iran.
http://online.wsj.com/article/BT-CO-20120208-711628.html
s what led the US to send in the CIA meddling to overthrow a democraticlly elected government. The US put in their owned puppet government which was eventually overthrown. The US has been after Iran since that time. Just because the has to muscle to bully other countries when they want their way doesn't make it right. I's imperialism and the West has been at it a very long time. Not everyone in this country is ignorant to the history between Iran and the US. That's what warmongers like your prey on with your propaganda BS. KICK ROCKS!!!
If we'd invested in solar and wind to the same extent we invested in Reagans Star Wars Missile defense system, nobody would care about Iranian or Saudi oil by now.
The whole thing is a house of cards. A simple terrorist attack on the Saudi infrastructure (which is in the open and has many vulnerable points) will bring the world economy down.
All this talk of war with Iran is insanity.
Those in the city jungles will not be so lucky.