Earlier today, according to Reuters, Iran threatened not to rule out the use of oil as a weapon. "When the Americans say that military action in regard to the nuclear issue has not been put aside Iran can also say it will not put aside oil as a tool." Kazempour Ardebil, senior advisor to Iran's Foreign Ministry and Iran's 'governor' to OPEC added that, "definitely the market would be faced with a new shock and oil prices will increase sharply," adding that prices would climb to over $100 barrel.
Washington says it wants a diplomatic end to the row over Iran's nuclear ambitions but
the Iranians have now clearly stated they may use oil as a weapon and that they may do so "if pushed". This as clear a threat as they have made on this issue.
Well, if only they would! Iran is on the cusp of an economic meltdown. Only their earnings on oil exports are holding the economy together with band-aids. If they stopped exporting their oil the economy, and almost certainly the government, would collapse in short order.
And what about that $100/bbl oil? Iran exports some 2.5 million barrels of oil a day or
some 800 million barrels a year. The United States has in its Strategic Petroleum Reserve some 750 million barrels in storage. The International Energy Agency has another 750 million barrels in reserve. Together with commercial stocks around the world the total oil held in reserve approaches 4 billion barrels. You do the arithmetic. In addition, our "allies" (remember Gulf War I) Saudi Arabia and Kuwait alone could easily produce another million barrels a day above current production levels.
If we didn't have an oil-addled administration whose one major accomplishment is the tripling of oil prices during their watch in government, all to the loud cheers of their oil patch brethren and their buddies in Saudi Arabia and other OPEC haunts, the solution would be simple. President Mahmoud Ahmadinejad, MAKE MY DAY!
Stop loading oil and we will release our reserves (if not for this, than what are the reserves for anyway?) and the IEA will do likewise. Even our good friends the Saudis and Kuwaitis will kindly be asked to help. And we will, in appropriate solemnity stand by and watch your economy and in all likelihood your government collapse.
But there is a caveat here. The oilpatch will probably be cheering the Iranians on, in the full knowledge that our oilman President will sit on his hands and do little or nothing to offset the Iranian embargo, happy that his oil industry friends and can go to the bank cashing in their $100/barrel oil gushers while reciting Persian verses in the process.
Advertisement