EU Iran Oil Embargo Likely Delayed Six Months; Obama Sends Teams of Consultants Worldwide Hoping to “Manage Supply and Demand of Oil”; Phased In Oil Shock

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Under pretense of looking for other sources of oil, EU Iran Oil Embargo Over Nuclear Work Said Likely to Be Delayed Six Months

A European Union embargo on imports of Iranian (OPCRIRAN) oil will probably be delayed for six months to let countries such as Greece, Italy and Spain find alternative supplies, two EU officials with knowledge of the talks said.

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The embargo, which would need to be accepted by the 27- nation bloc’s foreign ministers on Jan. 23, is also likely to include an exemption for Italy, so crude can be sold to pay off debts to Rome-based Eni SpA (ENI), Italy’s largest oil company, according to the officials, who declined to be identified because the talks are private.

A ban on petrochemical products would start sooner, about three months after EU ministers agree to the measure, one official said yesterday. Once a decision is made, member states would be barred from concluding new oil contracts with Iran or renewing those that are due to expire, while existing deals will be terminated within six months, according to a second diplomat today. Long-term contracts constitute the bulk of Europe’s purchases of Iranian oil.

Phasing in the European embargo would satisfy the concern of nations most dependent on Iranian crude, including Italy, Greece and Spain, the first EU official said. Those three nations accounted for 68.5 percent of EU imports from Iran in 2010, according to European Commission data.

As Europe weighs its embargo, President Barack Obama’s administration has sent teams worldwide to consult with countries on managing the supply and demand of oil, according to an administration official who briefed reporters in Washington.

OPEC’s other members would be able to make up for a drop in Iranian oil supply if the EU agrees to an embargo, said Chakib Khelil, the group’s former president. Even so, prices may temporarily rally to as high as $200 a barrel on news of any such blockade, he said today in London.

“It should be possible to replace, at least, the European consumption of Iranian oil,” Khelil said in an interview with Mark Barton on Bloomberg Television’s “On the Move.”

Obama’s Arrogance Coupled With Economic Idiocy

Anone who thinks president Obama can manage the supply and demand of oil is a fool. Sending teams worldwide in an attempt to do that is not only the height of arrogance, it is economic idiocy

Phased In Oil Shock

Iran is OPEC’s second largest oil producer. Bloomberg estimates that Iran pumped 3.58 million barrels of crude a day last month.

The idea that Iran’s oil supply can easily be replaced is pure nonsense.

Phasing in an embargo is the same as phasing in higher prices smack in the midst of an already guaranteed monster European recession.

Given that US Defense Secretary Admits “Iran Not Trying to Develop Nuclear Weapon” this move by the US and Europe is not only economic suicide, it is an illegal act of war as well.

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Can China Benefit From Obama’s Move?

Superficially, the only possible beneficiary to Obama’s and the EU’s economic warfare is China.

For details, please see China Snubs Geithner on Iran Oil; China Gets Cheaper Iran Oil as U.S. Pays Tab for Hormuz Patrols; Retired Admiral Warns “US Policy Benefits the Chinese”

However, it’s important to understand that Chinese “benefit” is an illusion, in isolation.

In aggregate, oil-dependent countries including China cannot conceivably benefit from an oil shock or higher oil prices because global trade will collapse. OPEC exporters may temporarily  benefit from higher prices but the expense will be falling usage and a strengthening worldwide recession.

If one wonders why Iran may want nuclear weapons, the US and EU have certainly given Iran sufficient reasons.

How to Stop the Madness

This proposed embargo is economic idiocy as well as an act of war by the US and EU on Iran.

Once again I point out that President Obama has continued the inane policies of President Bush. Newt Gingrich and Mitt Romney would do the same.

If one wishes to end the economic and war-mongering madness, there is only one electable choice: Ron Paul.

Mike “Mish” Shedlock
http://globaleconomicanalysis.blogspot.com

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avatarMike 'Mish' Shedlock - Mish's Global Economic Trend Analysis posted Friday, January 13th, 2012.

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