Iran sanctions would backfire: Russia

[cal04]

Russia's UN envoy has warned that slapping sanctions on oil-rich Iran over its controversial nuclear program would backfire on the world community as Tehran could retaliate by halting oil and gas exports. "If you impose sanctions theoretically on Iran, then it would be appropriate to ask: Who is imposing sanctions on whom: the international community on Iran or rather Iran on the international community?" ambassador Andrei Denisov told reporters.

"Iran is one of the major suppliers of oil and gas, so it will be a very strong blow on the international energy market - that is one clear consequence of imposing sanctions," the Russia ambassador said. He stressed that ongoing diplomatic efforts aimed "to try to solve the question without imposing sanctions." Oil traders also fear that Iran may use its energy weapon against the industrialised world in the face of possible sanctions.

But Iran, the second-biggest producer in the Organisation of the Petroleum Exporting Countries (OPEC), insisted Tuesday it saw "no reason" to stop oil exports as it faced the threat of being hauled before the UN Security Council over its nuclear ambitions. The five permanent Security Council members -- Britain, China, France, Russia and the United States -- plus Germany agreed in London Tuesday to bring Iran before the Council, but, in a compromise with Russia, put off UN action until at least the next IAEA meeting in March.

A resolution was submitted at the watchdog International Atomic Energy Agency (IAEA), whose 35-nation board of governors is expected at a meeting in Vienna on Thursday to send the Iranian issue before the Security Council, which has the power to impose sanctions. Iran insists that its nuclear program is a peaceful effort to generate electricity, but Europe, the United States and Israel fear it may be a cover for developing nuclear weapons. Moscow wants time to find a compromise solution.

http://www.abc.net.au/news/newsitems/200602/s1560438.htm

[hadrons]

1. Iran won't stop oil & gas exports ....

but they can just cut them in half, this way they can make the world scream and not hurt their revenue ... also stopping exports will spook future customers to their little oil exchange

[Heewack]

4. Half wouldn't do it.

They export now only 2.5 million barrels a day. 1.2 million could be absorbed pretty easily in a world that consumes 84 million a day. They need the money.

[hadrons]

6. maybe cut back a little more and also a little off-the-table dealing with

China could soften the blow

[VegasWolf]

8. You are making a lot of assumptions. First, the effect of an Iranian oil

slow down will not be linear. The market will be spooked and the effects will be amplified many times over. This has historically been the case. Bush will not be able to stop Iran any more than he could stop North Korea. Bush is simply talking out his ass.

[Tempest]

10. If Iran cut production even by a quarter

The shock would rock the oil market, shooting up the price by $20 to $40 a barrel.

[Tempest]

11. Who would absorb the loss?

That's the real question.

It won't be China, they receive the greatest amount of Iranian oil.

It won't be Russia, they receive the second most amount of Iranian oil.

It'll be the U.S. because Saudi Arabia and Kawait have no excess production capabilities. Nor would they be inclined to increase production to benefit the U.S. as they realize increased profits from as oil prices shot up.

Then there's the Saudi's reaction to Bush's proposal to cut oil imports by 75%. It didn't go over well there. So there's even less incentive for Saudi Arabia to bail the U.S. out.

[NickB79]

12. In the summer of 2005, the world had ~3 million bpd excess capacity

And oil prices were still in the $60's/barrel BEFORE Katrina hit. A 1.2 million barrels per day cut would most certainly not be easily absorbed in our world.

It's like comparing a person eating 3000 calories a day vs. a person living on just 200 calories above the bare minimum required to survive. You take away 100 calories from the well-fed man, no problem. You take away 100 calories from the poorly-fed man, and he's on the verge of starvation. The world was well-fed back in the 90's, when there were 10's of millions of excess bpd capacity and oil was $10/barrel. Now we're on the verge of oil starvation.

[VegasWolf]

2. Growing up in the 60's I would never have believed that I would believe

the Russian government over the US. Boy, times have changed!!!!

[Heewack]

5. You probably shouldn't.

Russia is no white knight.

[VegasWolf]

7. Like the US is?

[belab13]

3. A big game of chicken ensues. reminds me of that scene from

Rebel Without a Cause. It'll be Dubya who gets his belt stuck to the steering wheel and takes us all off the cliff.

[lovuian]

9. And Russia isn't going to pump out extra to compensate...

Its supporting Iran in many ways and then in many ways its not...