Iranian threats to close the Strait of Hormuz, the narrow shipping channel through which 17 million barrels per day of Middle East oil exports pass, has put, for the moment, a war premium into the oil price. The Iranians are reacting, in part, to the continued shadow war on their nuclear program. That war claimed another Iranian scientist recently in a scene straight out of a James Bond film.
On 21 February, the European Union announced a phased-in embargo on Iranian oil. It will be in effect from 1 July this year. How did Iran respond? Well it stopped oil exports to Britain and France. But this was no more than a symbolic two-finger salute. Because neither country has bought Iranian oil since last November. However, Carsten Fritsch an analyst at Commerzbank points out, ‘… Iranian oil exports to both these countries are virtually negligible, however the news is likely to have only a psychological effect, fueling uncertainty on the oil market’. In short, it will push up the […]