Will Sanctions Against Iran Increase the Price of Oil?

The Obama administration is examining - again - sanctions against Iran in January for Tehran's refusal to curtail what is plainly nuclear armaments development. American determination to implement these sanctions is counterbalanced by their effect on the price of oil and, as a consequence, prospects for economic recovery.

The Iranians are well aware of this dilemma. As stated in an article entitled "Iran sanctions 'will increase oil prices'" in Iranian PressTV:

"Iran has warned Western powers against sanctions on the Islamic Republic, saying any stop in Tehran's crude exports could lead to price hikes.

'Iran is one of the world's major oil producers and any cut in Iran's supply of crude will, undoubtedly, cause prices to surge,' Mehr news agency quoted Oil Minister Masoud Mirkazemi as saying on Tuesday.

. . . .

Mirkazemi said that imposing an embargo on Iran — the world's fifth largest crude producer — would not harm the country's oil industry.

Iran has the world's second and third largest gas and oil reserves respectively.

He also called on members of the Organization of the Petroleum Exporting Countries (OPEC) not to increase their oil output during their December 22 meeting."

http://www.presstv.ir/detail.aspx?id=112665§ionid=351020103

Answer:

This is the time to reach agreement with Saudi Arabia, battling with Iranian-backed Shiite rebels in Yemen, to increase oil production in the event that Iran curtails production. Agreement need be publicized to avoid market upheaval as the result of speculation.