The UK and France are not major markets for Iran - Iranian oil only accounts for about 3% of French oil consumption and even less of UK consumption; the UK has not actually imported any oil from Ian in the last six months.Thus this latest move by Iran has not led to a price rise because it is going to lead to shortages of fuel in the UK and France, the price rise is more a reflection of concerns about the further escalation in tensions between Iran and the West. There are also countries in Europe that receive far larger amounts of oil from Iran - Italy and Greece, for example - and fears that Iran will extend its oil export ban to those more dependent countries. However, this seems unlikely. Oil revenue is the single factor sustaining Iran's economy at the moment and if it cuts off large export markets, it is not guaranteed that it will quickly find alternative markets for its oil. In contrast, banning the tiny quantities of exports to the UK and France involves very little risk for Iran- indeed quite the opposite, it catches the headlines and leads to a higher global oil price, which is something Iran is very keen to encourage.
Monday, 20 February 2012
