November has ended and December has begun with concern over increasing difficulties with Iran. More sanctions by the EU and the U.S. in response to Iran's nuclear aspirations led to the storming of the British Embassy in Tehran on Tuesday, Nov. 29, as reported by Time. In addition, there is ongoing posturing between the Islamic Republic and Israel. But beyond the fear of the potential for violence against Iran's Western World adversaries and the country's nuclear program, there is a fear of what escalating tensions with Iran could do to the world's oil supplies and prices.
How much of the world's oil comes from Iran?
According to a report by Reuters, Iran supplies about 2.5% of the world's oil - about 300 million barrels a day. China is the largest importer of Iranian crude oil, with shipments of 547,000 barrels a day. Turkey and India also get a lot of their oil from Iran. Crude exports from Iran were exceeded last year only by Saudi Arabia and Russia, Bloomberg reported.
How is Iran's oil supply at risk?
Iran has threatened to close the Strait of Hormuz, a strategic transport route for oil supplies coming out of the region, if the United States or Israel were to attack it, Reuters reported in early November. Approximately 40 percent of the world's oil passes through that strait. With the European Union, who currently receives a fifth of Iran's oil exports, plotting an all-out boycott of imports from Iran and the possibility of military action against the country by Israel, former White House energy advisor Bob McNally says oil prices could surge to $175 a barrel if Iran retaliates by closing the Strait of Hormuz.
When would the prices begin to rise?
Prices have already begun to rise. According to U.S. News & World Report, talks of European embargoes have caused countries to look to places like Russia in order to keep up with the oil imports they need. Already the price of Russian crude oil has risen. According to Bloomberg, several places are still reeling from price increases this past April that arose from a lesser supply of exports from Libya during its conflict.
What can be done?
Not much can be done to prevent the rise in the price of oil in response to the rising tide of concerns about Iran. For now, countries are simply making sure they can still obtain enough oil. While a growing list of countries are announcing sanctions against Iran, they're also scrambling for backup options if the situation in the region continues to degrade. China's Foreign Ministry is asking Iranian crude oil importers to review contingency plans if those oil shipments from Iran stop coming, Reuters' December 1 article reported, and India refiners are also looking for a plan B. Spain and Greece have also been forced to look at alternative resources as other European countries poise for a ban, an article from AFP stated.
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