An Iranian oil embargo and a Russian oil boon

"Russian government has opposed the idea of Western petroleum sanctions against Iran. But new threats to Iranian oil flow could have at least one beneficiary: Russia. Its pipelines stand ready to serve customers willing to pay a premium price — with a grade of oil closely resembling Iran's."

The Hindu : Opinion / Op-Ed : An Iranian oil embargo and a Russian oil boon: Russia is now the world's largest oil producer. Though rising prices are a boon for every oil producer, Russia has a particular advantage: a pipeline system that can supply Iran's traditional customers in both Europe and Asia. Depending on which way the geopolitical winds are blowing, Russia has the ability to direct more or less of its oil either eastward or westward.

American politicians are divided in their willingness to disrupt global petroleum trading and financing to the potential detriment of strategic allies. At least one exemption in the bank strictures under discussion is meant specifically to limit the strategic benefits for Russia

There are other limits to Russia's ability to fully capitalize on the Iranian oil upheaval. The big one is that the Russian industry is already producing petroleum from its working fields at full capacity. But its extensive pipeline network gives Russia enviable flexibility to direct its oil to wherever demand — and prices — are highest.

Pushing Iran to the brink

"The European Union has decided on oil sanctions that Tehran has long said would represent a declaration of war. What will follow?"

This decision to impose a EU oil embargo, sets a potential bomb ticking, timed to detonate on July 1. The Hindu : Opinion / Op-Ed : Pushing Iran to the brink.


The U.S. has already begun beefing up its military presence in the region, and the IRGC is planning naval war games next month.

The Strait of Hormuz is the kink in the hose of the Gulf's oil supply to the world. A small amount of pressure can send crude prices soaring and starving the world's oil-dependent economies. Maintained over the long term, that is enough to strangle global economic recovery. But it is a decidedly double-edged one.

Until now the costs of a war with Iran outweigh the gains of setting the nuclear programme back. But if the U.S. were going to war over oil, that cost-benefit analysis would change. 

Even if Washington and Tehran remain determined to avoid all-out war, with every passing month there is a rising chance of one breaking out by accident.