Iran Spooks the World with Higher Oil Prices
Surging gasoline prices are stuffing Iran’s pockets as sanctions – so far – are not slowing down Iran’s nuclear race. ”Tehran is immune to sanctions,” The London Mail and Guardian reported Monday, and Iran may have the last laugh.
Sanctions theoretically would work, but China and Russian have led a large contingent of Asian and eastern countries that have refused to cooperate with the American-backed moves aimed at crippling Iran’s oil-based economy.
Iran has lived with spiraling inflation and a 20 percent devaluation of its currency since President Barack Obama stiffened sanctions earlier this year. However, plenty of countries are eager for oil, especially at discounts. Coupled with Iran’s counter-sanctions against some European countries, Iran is enjoying the best of both worlds – higher oil prices, continuing demand, causing a recession in the Western world and having a chance to mock the United States, which it constantly describes as feeble.
Iran this week refused to load a Green tanker with refined crude oil. Previously, Iran has said it will ban exporting oil to Britain, France and at least five other European nations.
The Obama administration is increasingly sure that sanctions will not stop Iran’s race for nuclear capability and that the military option eventually will be the only option, the London newspaper wrote.
The question is when?
The United States is more concerned with the moment before Iran can build a nuclear weapon, while Israel’s attention is on the increasing impossibility of its staging a pre-emptive strike as Iran continues to fortify its nuclear installations deep underground.
Another question is how much Iran is bluffing about its nuclear program, which has been damaged by computer viruses and may be operating with equipment far less functional than is claimed.
One additional factor in the timing of a military strike is the fact that the 2012 presidential election comes in a year when Americans are increasingly fed up with their country’s intervention overseas, especially when the economy is barely growing.
Although analysts are discarding the probability of an Israel strike before the elections, if at all, the talk of war has spiked the price of crude oil to $110 a barrel, the highest in years. The price of Brent crude passed the $125 a barrel mark. The record high price for crude is $148, reached in 2008.
"It is not that the Israelis believe the Iranians are on the brink of a bomb. It is that the Israelis may fear that the Iranian program is on the brink of becoming out of reach of an Israeli military strike, which means it creates a now-or-never moment," Colin Kahl, recently the U.S. deputy assistant Secretary of Defense for the Middle East, told the Mail and Guardian.
The specter of a spiking oil prices causing a new recession is real. High oil prices cause inflation not only at the pump but also for oil-based products, and higher prices in turn can dampen demand, cause a downturn in production and in the end leave more people unemployed.