The United States is increasing the pressure against Iran as President Barak Obama said on Friday that the sanctions announced last year will be implemented. These sanctions are the most severe to date and according to Obama, there is enough supply of petroleum that Iran’s oil is not necessary.
Iran produces about 2.2 million barrels of oil each day and Saudi Arabia has agreed to increase their output to cover the shortage. The sanctions are meant to make countries that buy Iran’s oil choose between doing business with Iran or with the United States. In addition, businesses will need to determine which country they want to do business with, as well, because it will have to be one or the other.
There are many that see the implementation of the sanctions as more of a political move rather than one to punish Iran. According to one of the directors at ClearView Energy Partners, Kevin Book, there are simply too many voters that would be upset if the U.S. did not follow through on making Iran pay for not stopping their nuclear program.
The sanctions will become fully in force on June 28. July 1 is when the European Union will fully enforce a complete embargo against Iran’s oil. Some of the other sanctions that are in place are already having an effect on Iran. The country has decreased its oil exports about 300,000 barrels a day in just the last couple of months.
Oil prices have increased about 20 percent since the beginning of this year because of the ongoing potential of a conflict with Iran. The sanctions have caused a huge jump in inflation in Iran and it is getting more difficult for Iran to get any imported goods.
The main buyers of Iranian oil are China, Japan, and India. The United States and the European Union have been pressing those countries to find another source of oil.