Iran is the fifth largest producers of oil in the world.
In what is likely a long overdue move, Iran has finally decided to give Europe a harsh lesson in game theory. Instead of letting Euro-area politicians score brownie points at its expense by threatening to halt imports and cut off the Iranian economy, the Iranian government will instead propose a bill calling for an immediate halt to oil deliveries to Europe. The move, with most reports citing the Iranian news agency Mehr, has come about in response to the EU agreement to impose sanctions against Iran, which were announced earlier this week. And why not? After all if Europe is indeed serious, sooner or later Iran will be cut off but in the meantime experience significant policy uncertainty, which is precisely what the flipflops on the ground need. The one thing that Europe, however is forgetting, is that all that whopping 0.8 Mb/d in imports will simply find a new buyer.Quickly.
So with China, India and Russia already having bilateral agreements with Iran in place, we are confident that said buyer will have a contract signed, sealed and delivered within an hour of the proposed bill’s passage. Furthermore, as SocGen speculated, the fact that Europe will be even more bottlenecked in its crude supplies (good luck Saudi Arabia with that imaginary excess capacity), and which just may force the IEA to release some more of that strategic petroleum reserve (and thus give JPM some more free money on the replenishment arbitrage) will send Brent to $125-150 – something which Iran will be delighted by. That is of course unless some “experts” discover that Iran may or may not have a complete arsenal of shark with fricking nuclear warheads attached to their heads (despite what Paneta has already said) which gives the US the green light for a full blown incursion, which in turn will send oil over $200, and the world economy into a global coordinated re-depression.
From Spiegel:
“If this bill is passed, the government will be forced to stop selling oil to Europe before the actual implementation of their sanctions,” said Emad Hosseini, spokesman for the Iranian parliament’s energy commission, reportedly said. The bill is set to become law on Sunday.
The EU sanctions allow for oil deliveries from Iran until July 1. Any pre-empting of this timescale by Tehran could prove problematic for countries like Italy, Greece and Spain, who would need to urgently find new suppliers.
China, meanwhile, a major importer of Iranian oil, has also criticized the EU sanctions. The Xinhua news agency quoted the Chinese Foreign Ministry on Thursday as saying: “To blindly pressure and impose sanctions on Iran are not constructive approaches.”
Many members of the EU are now heavily dependent on Iranian oil. Some 500,000 barrels arrive in Europe every day from Iran, with southern European countries consuming most of it. Greece is the most exposed, receiving a third of all its oil imports from Iran, but Italy too depends on Iran for 13 percent of its oil needs. If this source were to dry up abruptly, the economic conditions in the two struggling countries could become even worse.
Already on Wednesday, the International Monetary Fund (IMF) warned of the economic consequences of the EU’s planned embargo. Stopping deliveries from the world’s fifth largest producer could drive up the price of oil by 20 to 30 percent.
Perhaps instead of doing its best at crippling the world energy markets, and crushing the global economy, Europe should stick to bailing itself out, and other activities in which it has extensive experience.
Any interuption of the world oil supply could cause a global financial crisis. The world economies are based on petroleum. If the price of oil should rise to $200 a barrel it will cause hyper-infllation and eventually a monetary collapse where financial base of the economic system falls apart. World War 111 will be fought over oil. Wars are seldom fought over humanatarian principles, the are fought over business interest. This war will be financed with fiat currency created on a printing press. With a limited suppy of capital and resourses World War 111 is the last card that the bankers have left to play. It will be a justifiable genecide war to get rid of 90% of the world population. The oligarchy that is ruled by plutocrats that form a CABAL and which are comprised of elite politicians, bankers and industrialist Kill 2 birds with 1 stone: 1-Population Reduction 2-Control of the resourses. With advancements in technology they don’t need a large labor force anymore. Machines are replacing human labor. Even warfare is changing. You don’t need as many ground troops. The military industrial complex is developing a larger bunker buster that can penetrate much deeper to take out that enriched uranium facility in Iran. They have lazer guided smart bombs with on board computers, drones that have on board computers that are programed and do not need a pilot and guided misciles. The neutron bomb destroys only destroys buildings. More civilians are killed that are in harms way. They are counted as collateral damage. There are ususally more civilian casualties in world wars.
Increase the value of Gold, Which Most Americans don’t own a lot of, and decrease the value of the US Dollar (Which the US Government is already doing). Americans will be paying more for all things shipped . Why is the US Government trying to start a war with Iran? because Israel wants us to. When will America stop doing Israel’s dirty work? Will it take a total economic Meltdown to break the chains of slavery from our six-point masters? Hopefully we will not be too starved and impoverished to eradicate the corruption in this once great nation.
The west cannot go bullying on the world scene as they have in the past. They are handicapped by ever growing internal problems in their own countries. The “mighty” dollar has been exposed as having feet of clay, or is it paper? Without that paper imperialistic spinal dollar that props up a crumbling hypocritical capitalistic “Empire” it will disintergrate into nothing more than an old growling lion, minus, teeth and claws. It is becoming more and more exposed as a has been, making a last ditch global effort to flash its gums, as it struggles with its worn down claws in attacking second and third world countries that cannot defend themselves. Paying any mercenary body to fight by proxy their dirty battles, as they are past their best in taking on real adversaries. Like an old toothless lion that is emaciated from its own lack of power to feed itself, so goes the west. It is disintergrating from within at an alarming rate, its problems are cancerous, and spreading visibly, as it goes on its last hunt to feed its global agenda. Iran is a hunt to far, all that will be left on the global scene will be fit only for the vultures to feed on.