Saturday, 17 February, 2018

Assessing the legal and political dimensions of EU embargo of Iranian oil

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Assessing the political dimensions of embargo of Iranian oil:

Many independent international experts believe that the west’s problem with Iran is not the nuclear issue, but rather the changing balance of power in the Middle East. They know well that the latest EU’S embargo of Iranian oil will not impede Iran’s nuclear program, and without prejudice to the determination of Iranian young nuclear scientists. But their original purpose of these sanctions it to discourage the Iranian people and to squeeze them and finally to spark unrest and violence in Iran. It seems that Iran’s post-election unrest (2009) has caused them to think that they could spark a similar unrest after Iran’s parliament elections (2012).However, there is a question, “why did European Union’s embargo on imports of Iranian oil delayed for six months?”

With 460 million people, Europe is considered as the world’s second largest oil consumer behind the U.S and consumes 15 million barrels of oil per day. While fossil energy reserves energy is going to be over and replacing nuclear energy with fossil energy has not been possible due to Fukushima earthquake in 2010, emerging economies like India and China have become increasingly dependent upon energy to keep their economic development and new competitors are emerging day to day in the oil markets. Under the circumstances, why does Europe should lose another of its energy supply sources?

The latest report of European Energy and Transportation Commission shows that although the Europe has succeeded to supply 48 percent of its energy consumption, but EU’s dependence on imports of fossil fuels is increasing, so that its oil import from Russia and OPEC during last year was estimated at 33 percent and 35 percent, respectively.

Prof. Hans-Henning Schröder (University of Bremen and German Institute for International and Security Affairs, Berlin) has described three possible scenarios for Europe’s next decade: The continuation of current situation in Europe, Expensive oil for Europe and a Europe without oil and gas.

It seems that Europe has undermined its independence through following the U.S on embargo of Iranian oil. In current situation, Europe may face oil shortage and then, the scenario of expensive oil will be materialized for Europe.

Given to its economic crisis especially Euro challenges and internal dissatisfactions, Europe could not supply all its necessary energy. So, it will do everything to supply its necessary energy from alternative sources. Saudi Arabia has pledged to provide sufficient oil with all its customers. But, Could Saudi Arabia really balance oil market by exporting excess oil?

The first problem which Saudi Arabia will be faced with is OPEC’s rules. At OPEC’s last meeting, Saudi Arabia tried hardly to increase its production ceiling of oil, but other members of the organization opposed it. An expert of oil and energy issues in the Newsweek Magazine, Kenneth Pollack, says that: “The Saudis have said that they would offset any drop in Iranian oil by increasing their own, but many analysts question Riyadh’s capacity to do so completely or for a sustained period of time.”

Even if Europe could offset any drop in Iranian oil, it will probably be faced with another problem. An economist specializing in energy at Moody’s Analytics in West Chester, Chris Lafakis says that: “If European refineries were forced to replace Iranian oil with oil produced in other countries, they would face a significant challenge in matching crude oil quality. The European refineries that would be affected by an embargo are calibrated to run Iranian heavy crude oil. Saudi Arabia, Russia and Iraq, the three countries that would likely be tapped by Europe to replace Iranian crude, have blends similar to Iranian heavy, but European refiners would still need to make adjustments for their refineries to run smoothly and efficiently. Saudi Arabia’s Arab light blend is the closest match of the feasible replacements for Iranian heavy, but most Saudi excess output is Arab medium and Arab heavy, which have a higher sulfur content. Russia’s Urals blend is 24% sweeter than Iranian heavy, while Iraq’s Kirkuk blend is 28% more sour. The profit margins of European refineries had already vanished by the end of 2011.”

Meanwhile, International Monetary Fund (IMF) has declared that if Iran decides to suspend its oil export to Europe, world oil prices will probably rise by 30 percent. In this case, according to Economist Jeffrey J. Scott of the Peterson Institute for International Economics, Iran will sell less oil but earn the same money. In contrast, Europe’s situation is not now very pleasant and it is not clear whether it will tolerate the scenario of expensive oil.

Acknowledging the weak economic growth of European countries, the head of IMF, Christian Lagarde said that “financial crisis has reached out to social level from economic level.”

Assessing the legal dimensions of embargo of Iranian oil

International sanctions are considered as executive guarantees of International laws. However, powerful countries have used these tools to change the politics of those countries which might be unfavorable with them.

These sanctions are classified into three groups of economic, cultural and political sanctions; with the most effective one is economic sanction, because the cultural and political life of societies depends on their economic life significantly.

On the other hand, International sanctions are classified into two groups with regard to their enacting authority, the sanctions imposed by UNSC and other sanctions imposed unilaterally or multilaterally by countries.

Anyway, international sanctions should not harm the mandatory rules of international laws, for example they should not produce famine in the affected countries.

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