STRASBOURG – Even though oil prices climbed earlier last week amid growing tension between Iran and Western powers, oil fell towards $98 a barrel on 6 July as concern spread over the health of the US economy and investors expected the Norwegian government to end an oil workers' strike. Brent dropped $2.38 to $98.32, while US crude was down $2.61 at $84.63.
On 1 July, the European Union made good on its threat to impose an embargo on Iranian oil exports, and analysts expect the sanctions to cut the crude exports of Iran, OPEC's second-largest producer. Last year, the EU purchased about 18% of Iran’s oil exports — while the US has begun imposing measures against Iran’s central bank and foreign financial institutions that continue to work with it.
In response Iran test-fired missiles and renewed its threat to close the Straits of Hormuz at the mouth of the Persian Gulf, where about a fifth of the world's oil supply passes. The US military has recently doubled the number of minesweepers in the region, giving it greater flexibility to counter any Iranian effort to mine the Strait of Hormuz.
German MEP Elmar Brok (EPP), who chairs the European Parliament’s Committee on Foreign Affairs, told New Europe Strasbourg on 4 July that Iran has to know that they have to find a solution for the nuclear question. “If we have no sanctions or we delete the sanctions, then they will never come in with a solution on the nuclear question and therefore this is part of the peaceful method to get there. Otherwise, if we are not successful, others might use a military solution and we want to avoid military power. We want to avoid military power and we want to avoid the Iranian nuclear bomb,” Brok said. “We’re peaceful, we talk, we want to have a peaceful solution and we do not use military power,” Brok said.
Regarding Greece and Spain, which have been hit by the economic crisis and rely on Iranian oil, Brok acknowledged the situation but said, “We have to see that they support each other and they find other sources of oil for Greece and other countries”.
Asked if the sanctions will remain if there is no solution to Iran’s nuclear threat, Brok said “certain parties are losing patience and then we have a military strike which we want to avoid. But then Iran has to co-operate to avoid military strike”.
Regarding the outlook for oil, Mahaman Laouan Gaya, Secretary General of the Ministry of Energy and Petroleum of the Republic of Niger, told New Europe that he doesn’t think that the sanctions against Iran will have an impact on oil prices after the initial oil-price spike. “The quantity of crude oil Iran sends to the world is not so that important that we can feel the impact of the sanctions on this country,” he said, adding that Saudi Arabia will cover the deficit that will come from the sanctions on Tehran. “I don’t think the quantity of oil is not so important so the international market will feel the impact from sanctions,” he said.
KGeropoulos@NEurope.eu
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