British Foreign Secretary William Hague is depicted helping

Uncle Sam cut off exports of Iranian oil.

[The Independent, U.K.]

[Click Here for Jumbo Version]

Kayhan, Islamic Republic of Iran

By Obeying U.S. Sanctions on Iran, Europe Damages its Own Interests

Is Tehran really confident about surviving a tough new E.U. embargo on Iranian oil, or is it using a little psychological warfare to try and peel Europe away from the United States? According to this column by Ghanbar Naderi of Iran's state-run Kayhan, the E.U. may as drop its oil embargo now, since Iran doesn't need its business.

By Ghanbar Naderi

January 29, 2012

Islamic Republic of Iran - Home Page (English)

The United States and its European allies are not in a position to undermine Iran’s economic performance with an oil embargo. Indeed, a European Union ban on new contracts for crude oil and petroleum products from Iran would mean that its refineries would likely have to carry out multimillion-dollar reconfigurations.

Similarly, Western experts have warned that the whole embargo saga is a political and economic challenge for the E.U., especially at a time when it is suffering through an unprecedented economic downturn amid anti-austerity and protests against capitalism.

In this respect, the Supreme Leader's senior advisor, Ali Akbar Velayati, says that, “Western policymakers know all too well that their sanctions regime is a political maneuver. Iran doesn't need any country to do it favors by buying its oil, because global demand is always there.”

In addition, as has been maintained by several Iranian officials, Europe’s decision to embargo Iranian oil exports is not in anyone’s interest. Yet European policymakers overlook how the embargo might push global oil prices higher and even reshape the global oil trade.

Velayati also said, “In the absence of Iranian supply, global oil prices will go up - and they know it. But Iran will never allow a situation in which it can't sell oil - but other states in the region can.”

According to the U.S. Energy Information Administration, E.U. sanctions will affect about 450,000 barrels per day of oil imports to Europe, which will likely facilitate the transfer of billions of dollars in oil income from European governments to Chinese and Indian firms.

These firms have become major players in the global crude oil market, and some of them have no stock traded on exchanges, no U.S. assets, and offer no leverage that could be exploited by outside interests.

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Iran is responsible for over 5 percent of global oil output. The country’s top oil importers are China (22 percent), the E.U. (18 percent), Japan (14 percent), India (13 percent), South Korea (10 percent), and others (23 percent).   

Posted by WORLDMEETS.US

Perhaps that also explains why the International Monetary Fund has warned that Iran embargo would push up oil prices by 30 percent. That is a problem in a globalized, economically dynamic, resource-hungry world, where unintended consequences can matter tremendously, especially for the European Union.

To sum up, current conditions don't favor the West and the new sanctions will have a negligible impact on Iran’s economy or global oil trade. Iran exports less than 20 percent of its oil to Europe, which is not that much. Which is why, E.U. embargo or no, the country can and will sell its oil on the global market - perhaps long in advance.

Countries like China and India have announced decisions that they will not follow the West's unilateral policies. That means the United States and its European allies will find it hard to achieve success in their latest round of anti-Iran sanctions - just like the previous ones.