Iran Halts Oil Sales to Britain and France

It's really no surprise that oil prices have been steadily rising these past few days. The culprit? Probably Iran...

Iran ordered a halt on oil sales to Britain and France yesterday and reporters are calling this move a retaliation against tightening EU sanctions - U.N. inspectors flew over to Tehran in order to press the Islamic Republic over its disputed nuclear program.

Last month, Tehran was rather dissatisfied when the European Union decided to impose a boycott on its oil from July 1. In response, Iran (the world's fifth-largest oil exporter) threatened to close the Strait of Hormuz, the Gulf's main oil shipping lane.

At Iran's ministry website, spokesman Alireza Nikzad stated, "Exporting crude to British and French companies has been stopped ... we will sell our oil to new customers."

All is not lost, however, as Iran still expresses a willingness to resume negotiations on its nuclear program. Tehran sent a letter to EU foreign policy chief Catherine Ashton last week promising to bring "new initiatives" to the table. A five-member team from the U.N. International Atomic Energy Agency (IAEA) flew to Tehran late on Sunday for further talks, but Western diplomats do not feel that any major breakthrough will happen in this two-day meeting.

So what's the timeline at this point? Apparently 120 days. The European Commission says the bloc has enough stock to meet oil export needs for around 120 days should Iran decide to stop crude exports.

According to industry sources, though, European oil buyers were already making big cuts into purchases from Iran months in advance of EU sanctions. Amongst the European countries, France's Total has stopped buying Iranian oil, but a debt-ridden Greece would still be the most exposed to Iranian crude disruption.

Iran still holds that its nuclear program is entirely peaceful and this may very well be true. However, and more specifically, it's Iran's refusal to curb its uranium enrichment, which can have both civilian and military applications, that worries those concerned.

While the Western powers that be have not ruled out using force against Iran, there has been an intense and growing public discussion in Israel about whether it should attack Iran in order to prevent it from making a nuclear bomb. On Sunday, a top U.S. military officer said a military strike would be premature since it obviously has not been fully verified whether Tehran would use its nuclear capabilities to build an atomic bomb or not. Chairman of the U.S. military's Joint Chiefs of Staff, General Martin Dempsey, said, "I believe it is unclear [that Iran would assemble a bomb] and on that basis, I think it would be premature to exclusively decide that the time for a military option was upon us." He also stated that the Iranian government was a "rational actor."

Before we start judging the Iranians as a whole over this nukes-and-oil issue, I think it sometimes best to zoom in on the actual individual lives of these people. Aside from viewing their government as a whole, their citizens still have jobs and bills. Life is getting much harder and since oil is a major part of Iran's export revenues, it is a very important lifeline for its increasingly isolated economy. Tightening sanctions and high inflation have been pressuring the ability of working-class Iranians to feed themselves and their families. According to Marjan Hamidi, a random Iranian shopper in Tehran, "Everything's become so expensive in the past few weeks... But my husband's income stays the same. How am I going to live like this?"

I really hope this entire issue gets resolved, but somehow I don't see it happening soon. I would like to, but there are simply so many factors that come into play when one is trying to negotiate on a country-wide level. Stubbornness between negotiating parties in Greece is further evidence of that...

Ever so Watchful,

- Chris

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