In a preemptive move against the west, Iran said Wednesday it will end oil exports to the Netherlands, Spain, Italy, France, Greece, and Portugal.
The six nations, which account for 18 percent of the country’s total oil revenue, were scheduled to place an embargo on Iranian oil in July over the country’s much maligned nuclear ambitions.
Iran’s unexpected move puts the six European nations in a precarious spot as their refineries now have to find alternative sources of oil sooner than they expected, leading to increased demand for oil in the short term.
In order to make up for the loss of the European market, experts say Iran will sell the oil to China and India, but at a steep discount.
On the same day the announcement was made to cut exports to Europe, the country took a major step forward in its nuclear program.
Iran has begun loading nuclear fuel rods into its Tehran research reactor and has started using new advanced centrifuges at its main uranium enrichment site.
The development does nothing to quell the fears in the west and Israel that Iran is moving increasingly closer to creating an atomic bomb.
Israeli officials, who have openly admitted to considering conducting an air strike on Iran’s nuclear facility, have again been asked to remain calm by western diplomats, as Iran has agreed to meet to continue talks over its nuclear intentions.
However it is becoming increasingly difficult to take the talks seriously as Iran appears to be using the talks as a means of buying time to advance their nuclear program.
Oil prices in America shot up in the wake of Iran’s decision to cut European exports.
Prices reached the highest levels in five weeks.
Benchmark U.S. crude rose by $1.06 to end the day at $101.80 in New York.
Brent Crude, used to price foreign oil imported by refineries, jumped $1.58 to finish the day at $118.93 per barrel in London.
Independent oil analyst Jim Ritterbusch believes the sudden increase in oil was exactly what Iranians wanted to happen, saying: They’re trying to keep the market hyped up. Iran knows that by cutting off exports, it only hurts themselves. It reduces their revenue stream.”
Experts expect Europe to look to Libya and Saudi Arabia to account for the lost Iranian oil. If the two countries can’t carry the load, oil could prices could reach higher in the upcoming months.
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