Iranian oil: Europe has just a few days to blink…

“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… 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.”

Well played, Iran!  The threat of Greek and Italian economic collapse due to the loss of oil imports may well result in the European Union backing off from its threat rather than having to pick up the pieces- if that would indeed be possible.  And, by making an immediate cessation of oil exports to the E.U. dependent on a parliamentary vote taking place over the next few days, Iran is giving the E.U. time to back off without suffering any damage.

Obviously, nobody bothered to think this ill-advised measure through.  And as I recently suggested in “The European Union could stop the seige of Gaza…” (Jan. 13th, 2012): “Israel relies heavily on exports to Europe where it enjoys ‘favoured nation’ trading terms. So the EU could, at a stroke, end the evil occupation, the murder and the land theft, and perhaps resolve the whole problem in the Holy Land, by pulling the plug…”

Europe is threatening the wrong people, and could drag down the entire world economy if it continues to obey Israel’s directives.  And once China and India get used to receiving Europe’s oil, they will be most reluctant to part with it.  At the very least, our prices could move considerably higher in an unnecessary bidding war. 

Never raise on a busted flush!

Jeff Goodall.

Iran Set to Turn Off Oil Supply to Europe

Spiegel Online
January 26th, 2012

The European Union embargo on Iranian oil will only come into effect in six months, but the leadership in Tehran wants to act first: Exports to Europe are set to be halted immediately. It is a move which could mean added difficulties for struggling economies in southern Europe.

It’s a move which has tit-for-tat written all over it, but one which could nonetheless have a serious impact: The Iranian government wants to present a bill to parliament this weekend 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.

The sanctions banned any new contracts for buying oil from Iran, but allowed existing deals to continue until July in order to give countries time to find other sources. But that process is now at risk after the latest move from Tehran, a step the Iranian government had already threatened.

“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.”

Economic Consequences

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.

And the prices of different types of oil did rise on Thursday, albeit only slightly. In the morning, the cost of a barrel of North Sea Brent Crude was $110.73, 92 cents more than on Wednesday. The price of a barrel of WTI from the US was up 81 cents at $100.21.

dsk — with wires

See original here.

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