Oil sanctions taking toll on Iran

Some would argue that the European Union’s oil sanctions against Iran are a double triumph for Israel’s Prime Minister Binyamin Netanyahu

There are cynics among us who would argue that the European Union’s oil sanctions against Iran, which went into full effect on July 1, are a double triumph for Israel’s Prime Minister Binyamin Netanyahu.

If you assume that the real reason for his apparent hysteria over the alleged threat of Iranian nuclear weapons is to divert international attention from illegal Israeli settlements in the occupied Palestinian territories, then his strategy has been a spectacular success. The main reason that Israel’s allies are imposing these sanctions is to head off an Israeli military strike against Iran that would destabilize the entire region — and in the meantime, nobody is talking about the Palestinians.

In addition, the wily Netanyahu gets a bonus, for these sanctions really are going to hurt Iran economically. Iran is Israel’s most dangerous and implacable enemy, and suddenly its oil exports, and with them its hard currency earnings, are going to be cut in half. Not a bad return on an Israeli policy that cost nothing except some threatening rhetoric.

To be fair, not everybody is convinced that Netanyahu’s wild talk about attacking Iran is just hot air. A whole parade of senior Israeli military and intelligence officials has gone public to say that there is no imminent threat of Iranian nuclear weapons, and that attacking Iran “pre-emptively” would be deeply stupid. Clearly, they think Netanyahu really is a mad dog — but many others remain unconvinced.

In any case, the question of the moment is not Netanyahu’s strategy. It is whether these sanctions will hurt Iran so much that it will have to give up its cherished program for an independent capacity to enrich nuclear fuel in order to make the pain stop. The answer is: probably not, but they’re going to hurt a lot.

The European Union normally takes about one-fifth of Iran’s exports. If Iran cannot find new markets elsewhere, the loss of those exports would be serious but not crippling. However, at the same time the United States is imposing punitive measures on countries elsewhere in the world that continue to buy Iranian oil, and Europe has banned its maritime insurance companies from selling cover to ships carrying Iranian oil.

European companies still dominate the global market for maritime insurance, so that matters: South Korea, for example, will stop buying Iranian oil this week. And while the most powerful countries outside Europe can safely defy the American threat of punitive measures, knowing that they can negotiate exemptions for themselves, many weaker countries have no choice but to obey the American demands.

On June 27, an Iranian official admitted privately that the country’s oil exports had already fallen 20 to 30 per cent from the normal level of 2.2 million barrels a day. It is estimated that by July 1, the day all the sanctions came formally into effect, lost sales of Iranian oil amounted to more than a million barrels a day — that is to say, about half of the usual total.

This is not a trivial matter for Tehran. Given that the price of oil is also significantly down, and that Iran is now discounting oil sales to its traditional customers heavily to keep them from defecting, its ability to pay for imports is going to be severely constrained — this in a country where the average price of 10 basic foods has already risen 70 per cent in three months.

Yet there is almost no chance that Iran will back down. You do not have to assume that the regime really wants to build nuclear weapons to explain its defiance. This is a country that has faced a century of exploitation and humiliation at the hands of the West, and even those Iranians who loathe the regime will close ranks in defence of their nation’s right to enrich its own nuclear fuel.

On the other side, President Barack Obama will go on tightening the screws, because he dares not gamble that Netanyahu is only bluffing about attacking Iran at least until he has won re-election this November. There is no sign that other oil-exporting countries are going to show solidarity with Iran, and there is enough oil on the market at the moment that nobody else is going to go short of the stuff because of the embargo.

So it is going to be a long confrontation, and a miserable experience for the average Iranian. But for the rest of the world, it will just be a news story.




Gwynne Dyer is a London-based journalist whose articles are published in 45 countries.



Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

U.S. Senator Bernie Sanders sits in on a COVID-19 briefing with Dr. Bonnie Henry, provincial health officer, and Adrian Dix, B.C. minister of health. (Birinder Narang/Twitter)
PHOTOS: Bernie Sanders visits B.C. landmarks through the magic of photo editing

Residents jump on viral trend of photoshopping U.S. senator into images

The Keremeos Grist Mill and Gards is preparing for another season of their Pantry Share program, distributing monthly packages with preserves like the one taken in the photo above. (Grist Mill Facebook)
Shares in heritage community garden program go on sale

The Grist Mill and Gardens in Keremeos is bringing back its Pantry Share for 2021

Expect cold weather and snow over the weekend. (Submitted photo)
Prepare for subzero weekend in South Okanagan

Expect some snow to start falling Saturday night and into Sunday

Skaha Middle School
Arrest made in indecent acts near Penticton schools

A 32-year-old man was arrested and released on strict conditions, say police

Flooding has become a reality for many communities in the Okanagan Valley as the region faces more extreme weather storms, blamed on the impact of climate change. (File photo)
Okanagan high target for spring flooding

Higher snowpack and mild winter precipitation levels raise concerns for Canada’s insurance industry

U.S. Senator Bernie Sanders sits in on a COVID-19 briefing with Dr. Bonnie Henry, provincial health officer, and Adrian Dix, B.C. minister of health. (Birinder Narang/Twitter)
PHOTOS: Bernie Sanders visits B.C. landmarks through the magic of photo editing

Residents jump on viral trend of photoshopping U.S. senator into images

A COVID-19 exposure has been confirmed at Black Mountain Elementary in Kelowna Saturday, Jan. 23, 2021. (Google Image)
Another COVID-19 exposure confirmed at Kelowna school

Interior Health confirmed an exposure at Black Mountain Elementary School Saturday

Members of BCEHS Station 343 in Lake Country receive a donation of treats and wine from the community in December. (Contributed)
‘Unexpected and heartwarming’: Okanagan community supports paramedics

Cards, discounts, treats, more given to Lake Country paramedics in sign of support

A 75-year-old aircraft has been languishing in a parking lot on the campus of the University of the Fraser Valley, but will soon be moved to the B.C. Aviation Museum. (Paul Henderson/ Chilliwack Progress)
Vintage military aircraft moving from Chilliwack to new home at B.C. Aviation Museum

The challenging move to Vancouver Island will be documented by Discovery Channel film crews

The North Okanagan Naturalists' Club completed its annual swan and eagle counts Sunday, Jan. 17, 2021. (Claude Rioux - NONC photo)
North Okanagan bird count shows decrease in swan and eagle numbers

Trumpeter swans were down 61 per cent from last year’s count; eagles down 14 per cent

Okanagan Indian Band Chief Byron Louis has served as the band’s chief since his first of six electoral wins in 1991. (File photo)
Okanagan Indian Band seeks nominations for upcoming election

A new OKIB chief and council will be elected March 30, 2021

Lake Country firefighters helped deliver a healthy newborn baby Thursday, Jan. 21, 2020. (Pixabay)
Lake Country firefighters help deliver baby boy

Firefighters from the Winfield hall assisted with the birth of a healthy newborn Thursday morning

A video posted to social media by Chilliwack resident Rob Iezzi shows a teenager getting kicked in the face after being approached by three suspects on Friday, Jan. 22, 2021. (YouTube/Rob i)
VIDEO: Security cameras capture ‘just one more assault’ near B.C. high school

Third high-school related assault captured by Chilliwack resident’s cameras since beginning of 2021

An individual at Rutland Senior Secondary school has tested positive for COVID-19. (Aman Parhar/Omineca Express)
Individual at Central Okanagan school tests positive for COVID-19

Authorities say the person is self-isolating at home with support from local health teams

Most Read