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  Last Update:  27 February 2012 16:32  GMT                                      Volume. 11378

Sanctions on Iran hike gas prices
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Risks to global oil output, once confined to Iraq and Syria, are now spreading to Africa.  The intelligence data show that the inventories are low and Saudi Arabian oil minister's promise to make up any shortage is being called into question.  The state of oil supply is reflected in the price difference between the prices for immediate delivery and the contracts for longer delivery dates.  The short term oil contracts for Brent crude has jumped $7 a barrel this month to more than $118/bbl and on Feb. 15 it rose to as high as $120/bbl.  
 
From all signals sent by the international oil market, the U.S. plans to limit Iran's oil revenue by pressing the European countries, especially those suffering from debt crisis like Spain, Greece and Italy, to boycott the purchase of the Iranian oil is neutralized by higher prices. The shortage of oil supplies has pushed the prices so far up that higher oil prices are compensating for lower amounts of oil sold. According to a commodity analyst at Citi, "There is little redundancy across the whole system: inventories are really low, and there is low spare capacity and supply risks…"  The tightness in oil supply is primarily caused by the U.S. war drive and interference in the domestic affairs of other countries.  The damage is felt not only by the oil producing countries but also the European countries in recession and the consumers in the developed and developing countries through higher prices at the pump stations and heating their living spaces, not to mention the commercial enterprises. For example, the U.S. and NATO helped to break Sudan into two parts.  Currently, south Sudan engaged in a dispute over transit revenue with northern Sudan has terminated oil production and deprived the market of about 300,000 barrels per day.  
 
The U.S. invasion of Iraq damaged that country's oil installations pipes, ovens and refineries.  Today, Iraq has a production and refining capacity less than half of what it had before the U.S. invasion and bombardment totally greater than the U.S. military engagement in WWII. In Yemen, the U.S. and Saudi Arabian military intervention and the resultant support for the ancient regime has blocked the path of the revolution for a clean-cut success, establishment of a people's democracy and putting the wheels of the economy back to work.  The foreign powers imposed civil war in Yemen, along with labor strikes halting oil output at the country's oil field at Masila, where total production has fallen drastically. 
 
The Syrian political condition is aggravated by U.S.-(Persian) Gulf Cooperation Council's intervention and its oil export is blocked by the western-imposed sanctions.  While the Western oil corporations have rushed to plunder Libya's oil wealth as fast as possible, yet its oil production and export is way below the pre-invasion levels.
 
According to Barclay's Capital calculations the social unrest in Sudan, Yemen and Syria put together curtails over one million barrels a day of output -- or one percent of global supply -- from the world market.  All this is compounded by the looming U.S. European sanctions on Iranian imports, which will deepen the chronic recession of the European economies by depriving them from 600,000 barrels a day of crude oil.  In addition to receiving higher prices for its oil, Iran will be able to find alternative buyers for the majority of those barrels. To show its animosity and destructive power, the U.S. political pundits used to say that the upcoming U.S.-EU sanctions will force Iran to sell its oil at a discount.  But it seems Iran not only is not forced to sell at lower prices, but on the contrary is being freed from some long-term contracts, enabling Iran to begin selling the barrels at the spot for higher prices.  It seems once again, the U.S. has shot itself in the foot.
 
Goldman Sachs in a current research note writes that OPEC spare capacity is "approaching dangerously low levels" and this condition is reaching dominance "just as world economic growth is beginning to strengthen."  Such a situation would make the world oil market increasingly vulnerable to sharp price hikes in 2012.  
 
Could it be that in the wake of U.S. imposition of the latest sanctions on Iran, the Saudi Arabian assurances that it possesses the spare capacity to make up for the shortfalls was simply a bluff whose function was to make the task of passing the Congressional resolutions 'a walk in the park'.  The path of least resistance for prices is still to the upside", says Barclay's Capital. Pursuing its own strategic and geopolitical interests, the U.S. pressured the European countries, especially Portugal, Spain and Greece to impose sanctions on their importation of Iranian crude oil.  To show that the U.S., UK, and France are not the only countries that can carry out pre-emptive strikes, the Islamic Republic of Iran decided preemptively to shut down its oil export to the most aggressive imperialist countries behind the U.S.: Britain and France.  To deceive the European and American public, the U.S. and British publications began immediately spreading false data with regards to world oil supply and deliberately underestimated world oil consumption. While the oil and gas stock markets sharply told different stories, the pundits tried to blame Iran and not the shortage in supply for higher oil and gas prices.  Furthermore, they connected the story of oil and gas to Iran's civilian nuclear industry, confusing the American and European public as to the real causes for paying higher prices at the gas stations.
 
Ardeshir Ommani, President of the American Iranian Friendship Committee (AIFC), is a writer and political analyst with a background in Political Economy. AIFC was created in 2004 to promote peace and dialogue between the U.S. and Iran, and prevent any NATO instigated war on the Iranian people.

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