Iran oil embargo - backfire risk worry

Updated: 
Details of an Iran oil embargo are likely to emerge shortly - and how far support would stretch for them. So far EU states are moving towards a 1 July deadline, subject to prevailing conditions at the time and on-going negotiations with Iran.

Would an embargo really work? There are profound worries, from an influential overseas authority, that it would not.


Ordinary Iranians hit

An embargo would work closely with US measures. So far these have been focused on Iran nuclear and military capacity rather than the general population. But a nationwide oil embargo backed by the EU would hit ordinary Iranians hard.

Iran, for the moment, is fighting back, claiming demand globally exceeds supply - and that any attempts by the US to encourage Europe to enforce an embargo is an own-goal for the European economy. "The EU is a serious rival for the US economy and Americans marginalize their foes by this means," the Fars news agency has reported a senior Iranian diplomat as saying.

History lessons

Influential voices from Chatham House however claims that an oil embargo on Iran will not succeed, and could make a very difficult situation considerably worse. Chatham House's Paul Stevens says, in a new report, that history is littered with failed oil embargoes ranging from Cuba, Rhodesia and South Africa to the Arab oil embargo and the embargo against Iraq after 1990.

"However, the lessons of history appear to have passed by the decision-makers of the EU. An EU oil embargo could greatly strengthen the Ahmadinejad regime at a time when it is under considerable pressure, especially with parliamentary elections looming in March. Unemployment remains very high, as does inflation."

Retaliation likely

Stevens says that much of the analysis has assumed Iran would accept the EU embargo without retaliation. "This is extremely unlikely. Recently there has been much speculation that its response would be to inhibit the flow of oil through the Straits of Hormuz. There are two reasons why this is unlikely. First, any closure would equally damage Iran's ability to export the oil on which its economy is so dependent."

Secondly, he says, serious and credible attempts to close the Hormuz Strait "are in effect Iran's 'big guns' on the issue of whether or not the United States or Israel would launch a military attack on Iran." Would the US take the bait?

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