Has France's President Sarkozy, who is now calling for a European boycott of Iranian oil, been reading the HuffPost?
Perhaps, perhaps not. But one thing is certain, the concept of embargoing Iranian oil has been espoused in this corner on numerous occasions over the past weeks and months while barely a word on this issue was to be found in our media at large nor within the fulminations of our government calling for ever broader sanctions against Iran in its pursuit of nuclear weaponry.(Please see "Iran Threatens The Use Of The Oil Weapon,"11.21.11 and "Europe's Praiseworthy Syrian Oil Embargo. Why Not Now a U.N. World Embargo on Iran's Oil?" 10.3.11.)
Much has been written about commercial sanctions, but rarely about the truly overarching policy initiative that could take down the Iranian renegade regime, removing the risk of the world confronting nuclear armed fanatics. This, without firing a shot. Nor firing a single missile nor bombing a nuclear weapons installation.
All that could be realized with a truly effective embargo on Iranian oil exports, denying the mullahs the billions used to pay off their enforcement goon squads and the loyalties of their puppet Parliament. It would empower the Iranian people who have been subjugated by the corrupted iron fist of the current entrenched dictatorship.
And now France is spearheading a push for a European oil embargo on Iran ("Paris Urges EU Ban On Iran Oil" FT 11.25.11), much in the fashion of Europe's current embargo on the import of Syria's oil. The issue will be discussed in tomorrow's meeting of EU's foreign ministers in Brussels.
The United States does not import oil from Iran. Yet a European embargo of Iranian oil, oil being a fungible commodity with a world market price, would have a significant impact on world oil prices. To counter what would be the knee-jerk reaction of the market both in trading psychology and dislocation of physical supply, the US. could play a meaningful role were such an embargo policy to be adopted.
The Strategic Petroleum Reserve maintained by the U.S. holds some 750 million barrels of oil. Europe as a whole imports 450,000 barrels of oil daily from Iran. The current price for Brent crude is $111/bbl.
In solidarity with a European embargo of Iran's oil the United States could declare that, given the existential risks to itself and the world that would result from nuclear weapons in the hands of messianic fanatics, it would make available to the European embargo effort a significant amount of its Strategic Oil Reserve holdings. These supplies would be allocated, by way of discussion points, on the following basis:
Given that the current price of Brent crude is $111/bbl every day that the price of Brent pierces that ceiling the U.S. will release 200,000 barrels of oil from its Strategic Petroleum Reserve (SPR).
Were the price of Brent to go above $111/bbl for an entire year, the total draw-down from the SPR would top out at 73 million barrels, but ten percent of its current inventory. It would be a small price to pay given the risks to national security that would result from an Iranian bomb. Strategically it would be a bulls-eye utilization of what the SPR is meant to accomplish in national emergencies.
The balance of the difference between the 450,000/bbls being embargoed could readily be made up by Saudi Arabia whose spare capacity far exceeds the remaining 250,000 barrel shortfall, and in whose interest it is to be supportive of the aims of this embargo (please see "Saudi Arabia's Appropriate Response to Iran's Assassination Plot," 10.16.11)
Simultaneously the US should make it known that if Saudi Arabia does not cooperate and uses the resulting dislocation of the oil market to achieve ever higher prices, that with each and every week that ends with Brent crude prices rising beyond $111/bbl, the U.S. Navy would withdraw one of its more than 30 vessels patrolling the Persian Gulf whose primary yet undeclared purpose is to protect Saudis' Sunni Monarchy from Shiite Iranian aggression.
Here is an opportunity for our Administration, instead of talking the talk, actually walking the walk.