President Obama fires another Economic salvo against Iran

President Barak Obama has stepped up sanctions against Iran by issuing a June 28th deadline for all allies to significantly reduce their procurement of Iranian Oil. Any financial institutions doing business with Iran’s central bank will face sanctions barring them from operating in the U.S. This in conjunction with the European Union’s complete embargo on Iranian Oil that is to come into effect from the 1st of July is expected to significantly impair Iran’s finances and push it towards rethink on its nuclear program.

These sanctions are a way to avoid an armed conflict between Iran and Israel by forcing Iran to shut down what they world believes is its nuclear weapons program, and to open its nuclear facilities to inspection by U.N agencies.

The price of crude oil has spiked by 20% these last few months on speculation of unrest in the Middle East; President Obama has said that he believes that by ramping up oil production in the U.S, Saudi Arabia and other oil producing nations there will be enough oil to allow countries to reduce their consumption of Iranian oil. The expected short fall is to be in the range of about 1 million barrels a day, while Saudi Arabia has the capacity to increase its oil production by 1.5 million barrels a day. The Saudis have promised to ramp up production of crude to ensure that oil prices stabilize, Saudi Oil Minister Ali Naimi has said in an opinion piece in The Financial Times that he would like to see the European economy back on its feet and realizes that lower crude prices are a key factor in achieving this.

 

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