EU Bans Iranian Oil as Tensions Rise

Tensions surrounding Iran’s pursuit of a nuclear capability have continued to rise in recent days. In addition to today’s announcement by the EU that it would ban its nations from importing Iranian oil, a U.S. aircraft carrier accompanied by warships from Britain and France passed through the Strait of Hormuz over the weekend. In spite of recent threats by Iran, the country seemed to acquiesce to the USS Abraham Lincoln entering the Persian Gulf, referring to U.S. Naval exercises in the area as “normal”.

And, it’s also very important to note that the EU ban on Iranian oil does not really take effect until after July 1. Any contracts to purchase Iranian oil through that time will be honored, although it is unclear whether Tehran will continue to supply oil during that time frame. Several Iranian officials have suggested that the Islamic Republic immediately cease shipments of oil to EU nations, which would have a tremendous impact on the fragile economies of struggling EU nations like Greece, Italy, Portugal and Spain.

Iran has recently signaled that it is considering having direct talks with Western powers about its nuclear ambitions, but it is unclear if any substantive progress has been made through diplomatic channels. Israeli leaders have expressed concern that Iran may never bow to diplomatic or economic pressure and that proactive military strikes may be the only true deterrent.

With the instability of the global economy, it is unclear exactly how much leverage either side has in the current stare down. If a military conflict ultimately develops, it is unclear exactly how far U.S. forces would take their mission.

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