EU Oil Embargo on Iran Goes into Effect Sunday
June 28, 2012
European Union sanctions on Iran’s oil industry go into full effect on Sunday, adding to the pressure on Iranian leaders to negotiate a settlement of the international concerns about their nuclear program.
The world runs on oil, much of it transported on ships from countries in the Middle East, including Iran. But the European Union has all but stopped its imports from Iran, and the flow will stop completely by Sunday.
The move was expected to be costly, resulting in an increase in the price of oil. Instead, the price has dropped by 20 percent since April.
"What has happened is that Libyan production is coming back, Saudi production has been increased, Nigerian production went up and Iraq has also increased output. And the net increase has been half a million barrels a day," said Leo Drollas of London’s Center for Global Energy Studies.
No need for Iran's oil
Drollas says the world has so much oil that it doesn’t need Iran’s output. And Iran’s rival Saudi Arabia appears eager to keep it that way.
That is bad news for Iran, where international sanctions have caused a 20 percent inflation rate, with food prices rising more than twice that fast.
Now, the situation will only get worse, according to Iran expert Mark Fitzpatrick at London’s International Institute for Strategic Studies.
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