Iran Oil Industry Embargo and Weak Bargaining Power
An interview with Dr. Mousa Ghaninejad, university professor and expert in economic affairs
New sanctions against Iran’s oil industry would have adverse effects but could not paralyze the industry.
An interview with Dr. Mousa Ghaninejad, university professor and expert in economic affairs on this topic follows.
The impression Barack Obama gave to some analysts in the latest round of presidential debate with his Republican rival John McCain was that his potential option against Iran would be an embargo on gasoline export to IRI. In the meantime, British Prime Minister Gordon Brown has called for new sanctions against Iran’s oil and gas industry to put pressure on Tehran to stop its nuclear program. Also, British Foreign Secretary David Miliband, responding to questions by the British MPs on attracting support from the Europe Union to join the embargo against Iran’s oil and gas sector, said in order to stop Iran’s uranium enrichment program London was committed to continue its efforts in imposing sanctions against Tehran’s oil and gas industry.
To learn more about the extent of impacts an embargo of Iran’s oil industry would have on its nuclear program as well as the feasibility of such international measures, Iranian Diplomacy has interviewed Dr. Mousa Ghaninejad, university professor and expert in economic affairs.
Q: What would be the impact of an embargo on Iran’s oil and gas industry, including gasoline exports on Iran’s nuclear program?
A: Such decisions would not be practical because Iran would provide for its needed gasoline from other channels. There are also some other countries which are interested in investment in Iran’s oil industry but the only difference is that Iran would have to pay some extra price for this. When there is negative propaganda against Ira’s oil industry by the developed countries investment costs including insurance and finance would go up. Therefore, such sanctions would be very negative for IRI but they would not be effective in paralyzing the country’s oil industry.
Even the previous sanctions too have left their impact on Iran’s oil industry only by increasing investment costs. On this basis, the rivalry between various countries on cooperation with Iran in different oil industry aspects has decreased and our country is now in a weak position as far as bargaining on oil and gas development projects is concerned.
Q: The global economic and commercial crisis is leaving its impacts on the oil market. What type of pressures could a possible oil industry embargo coupled with the current economic crisis exert on the Iranian government?
A: It is not very clear now but if the US economic crisis spreads to other countries it would definitely reduce the global economic growth and cause a decline in the demand for oil. This would mean falling oil prices, which is already happening. But if the crisis persists the oil price would go further down and this would cause problems in the coming years for the oil exporting countries in providing for their budget resources, particularly Iran which is highly dependent on oil income.
Q: How long do you think the current economic crisis would continue?
A: The United States and Europe are presently endeavoring to check the scope of the crisis by seeking help from their central banks and state financial institutions. But whether their policies would succeed or not is uncertain. The US presidential polls are close and the Americans are working hard to reduce the intensity of the crisis at least for the short term and until the elections are held in November. But it is not clear if they will manage to overcome the crisis.