E.U. Oil Embargo Increases Economic Pressure on Iran
By: Ryan Matthew Dernick
The European Union will soon discontinue purchases of Iranian oil two weeks from July 1st. China, India, Japan and South Korea are under increasing geopolitical pressures from the Unites States to stop buying Iran’s oil. As of today Iran’s global oil exports are down 20%.
Between the previous barrage of sanctions brought upon Iran in regards to its ongoing nuclear ambitions and the slow clamping off of its oil exportation the Persian country is becoming economically cornered.Iran’s leaders have said they can weather this international pressure despite the difficulties imposed on them already.
Iran has purportedly shut off the G.P.S. systems on their oil tankers to hide their movements, which leads some analysts fearful of possible under the radar smuggling of their crude. Once the European boycott is initiated Iranian exports could very well be cut in half. There is an ever growing fear from the global market community that once the E.U. oil embargo is actualized upon Iran there will be a marked spike in oil prices. The reason for the worrisome speculation is that Iran usually exports 2.2million barrels of oil per day and is already down 600,000 barrels from that.
Muhammad Sahimi is a Professor of Chemical Engineering and Materials Science, and holds the NIOC Chair in petroleum engineering at the University of Southern California in Los Angeles. On this perceived worry he says,
” There are other oil producers very eager to fill the void in oil demand. Saudi Arabia, Angola, Iraq and more recently Libya have been increasing their oil production and they will be able to compensate for the amount of oil Iran will lose in exports.”
With the growing scrutiny upon Iran, European firms have stopped selling insurance on Iranian oil. This is becoming a pivotal factor in further stymieing Iran’s oil exports.
David Goldwyn former State Department Special Envoy for International Energy Affairs in reference to that factor says ” The denial of insurance to a tanker fleet is the most effective tool that we have because it does not require countries to do anything it just shuts off the access to the trade.”
As the sanctions continue to fly upon Iran only time will tell the eventual outcome from this E.U. oil embargo being firmly set in place.