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Iran and its oil

Iran and its oil

The US and Europe are getting tough with Iran. But what will stringent new sanctions against a major oil country mean for the industry and the region?

July 20, 2010 4:34 by



Decades of sanctions against Iran have stunted its economic development and the growth of its all-important oil sector.

The international community, led by the United States, has made sanctions more and more stringent as Iran has refused to abandon its nuclear program.

Iran claims it is seeking only to provide enough energy for civilian use, but the international community suspects it of trying to develop atomic weapons.

HOW DO THE NEW SANCTIONS DIFFER FROM PREVIOUS ROUNDS?

In the latest wave of sanctions agreed in June and July, Europe has launched its first attack on technical assistance and investment in Iran’s oil industry. For its part, the US is not just restricting its own companies, but also the US operations of international firms that supply fuel to Iran.

A fourth round of United Nations sanctions in June imposes measures against new Iranian banks abroad if a connection to the nuclear or missiles program is suspected, as well as vigilance over transactions with any Iranian bank, including the central bank.

ARE THE LATEST EU/US SANCTIONS LIKELY TO MORE EFFECTIVE THAN PREVIOUS MEASURES?

Hossein Askari, Iran Professor of International Business and International Affairs at the George Washington University, Washington DC, cited three reasons they will be:

1. It’s relative. “The latest UN sanctions were not really that biting.”

2. The new sanctions follow punitive action that underlines the risks companies run if they breach them.

Credit Suisse agreed to pay a more than $500 million fine after it violated US sanctions against Iran.

3. Ships will be inspected. “You’re going to be much more cautious in doing anything with Iran,” said Askari.



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