Best of the Week
Most Popular
1. Gold Final Warning: Here Are the Stunning Implications of Plunging Gold Price - P_Radomski_CFA
2.Fed Balance Sheet QE4EVER - Stock Market Trend Forecast Analysis - Nadeem_Walayat
3.UK House Prices, Immigration, and Population Growth Mega Trend Forecast - Part1 - Nadeem_Walayat
4.Gold and Silver Precious Metals Pot Pourri - Rambus_Chartology
5.The Exponential Stocks Bull Market - Nadeem_Walayat
6.Yield Curve Inversion and the Stock Market 2019 - Nadeem_Walayat
7.America's 30 Blocks of Holes - James_Quinn
8.US Presidential Cycle and Stock Market Trend 2019 - Nadeem_Walayat
9.Dear Stocks Bull Market: Happy 10 Year Anniversary! - Troy_Bombardia
10.Britain's Demographic Time Bomb Has Gone Off! - Nadeem_Walayat
Last 7 days
Stock Market Crash Edition - 26th Mar 19
Handy Ways to Boost Your Home Income - 26th Mar 19
US Treasury Bond Yield Inversion and Political Fed Cycles - 26th Mar 19
Golan Heights Oil all about the Shekels - 26th Mar 19
Falling Yields a Catalyst for The Gold Catalyst - 26th Mar 19
Can We Lock Up Rachel Maddow Now? - 25th Mar 19
Real US National Debt Might Be $230 Trillion - 25th Mar 19
Friday's Stock Market Sell-Off - New Downtrend or Just Correction? - 25th Mar 19
20 Days Left to Find Buying Opportunities In Gold - 25th Mar 19
Will the Historic Imbalance in Gold Stocks to Gold Price Resolve ? - 25th Mar 19
EasySMX Wireless Games Controllers Review - 25th Mar 19
Stock Market Short-term Top - 25th Mar 19
UK Population Growth - Latest ONS Immigration Statistics and Consequences - 24th Mar 19
The Fed Follows Trump's Tweets, And Does The Right Thing - 24th Mar 19
Yield Curves, 2yr Yield, SPX Stocks and a Crack Up Boom? - 24th Mar 19
Risk/Reward in Silver Favors Buying Now, Not Waiting for Big Moves - 23rd Mar 19
Similarities Between Stock Market Today and Previous Bull Market Tops - 23rd Mar 19
Stock Market DOW Seasonal Trend Analysis - 23rd Mar 19
US Dollar Breakdown on Fed Was Much Worse Than It Looks - 23rd Mar 19
Gold Mid-Tier GDXJ Stocks Fundamentals - 23rd Mar 19
Which Currency Pairs Stand to Benefit from Prevailing Risk Aversion? - 23rd Mar 19
If You Get These 3 Things Right, You’ll Never Have to Worry About Money - 22nd Mar 19
March 2019 Cryptocurrency Technical Analysis - 22nd Mar 19
Turkey Tourist Fakes Market Bargains Haggling Top Tips - 22nd Mar 19
Next Recession: Finding A 48% Yield Amid The Ruins - 22nd Mar 19
Your Future Stock Returns Might Unpleasantly Surprise You - 22nd Mar 19
Fed Acknowledges “Recession Risks”. Run for the Hills! - 22nd Mar 19
Will Bridging Loans Grow in Demand and Usage in 2019? - 22nd Mar 19
Does Fed Know Something Gold Investors Do Not Know? - 21st Mar 19
Gold …Some Confirmations to Watch For - 21st Mar 19
UKIP No Longer About BrExit, Becomes BNP 2.0, Muslim Hate Party - 21st Mar 19
A Message to the Gold Bulls: Relying on the CoT Gives You A False Sense of Security - 20th Mar 19
The Secret to Funding a Green New Deal - 20th Mar 19
Vietnam, Part I: Colonialism and National Liberation - 20th Mar 19
Will the Fed Cut its Interest Rate Forecast, Pushing Gold Higher? - 20th Mar 19
Dow Jones Stock Market Topping Pattern - 20th Mar 19
Gold Stocks Outperform Gold but Not Stocks - 20th Mar 19
Here’s What You’re Not Hearing About the US - China Trade War - 20th Mar 19
US Overdosing on Debt - 19th Mar 19
Looking at the Economic Winter Season Ahead - 19th Mar 19
Will the Stock Market Crash Like 1937? - 19th Mar 19
Stock Market VIX Volaility Analysis - 19th Mar 19
FREE Access to Stock and Finanacial Markets Trading Analysis Worth $1229! - 19th Mar 19
US Stock Markets Price Anomaly Setup Continues - 19th Mar 19

Market Oracle FREE Newsletter

Stock Market Trend Forecast March to September 2019

Iran Sanctions Inflicting Pain At Gas Pump, Stalling Energy Projects

Politics / Gas - Petrol Aug 25, 2010 - 11:39 AM GMT

By: OilPrice_Com

Politics Best Financial Markets Analysis ArticleAlthough the Iranian government insists that countries like China and Russia can make up lost Western investment in the petroleum sector, rising gas prices and stalled energy projects are signs that the regime is beginning to buckle under international sanctions.


The United States, Canada and Australia, as well as the United Nations and the European Union, have stiffened financial penalties over the last several weeks against Iran for its nuclear program, which Tehran argues is meant for civilian uses like power generation and medical purposes.

In recent weeks, Tehran has begun to feel “a lot of pressure” on the gasoline front, said Houchang Hassan-Yari, a professor of international relations at the Royal Military College of Canada in Kingston, Ontario. The government is now curbing from 100 liters to 60 liters (roughly 26.4 gallons to 15.9 gallons) the amount of subsidized gas consumers can buy each month, Hassan-Yari told OilPrice.com.

Iranian motorists must pay 100 tomans per liter of gas (less than 10 cents), “but if you purchase more than 60 liters, you have to pay 400 tomans per liter,” he noted. “And there is no clarity about the situation in the next two or three weeks to two months in terms of volume but also [in] the price.”

The increase has already begun to affect many aspects of Iranian life, including moving agricultural products to market, he said, citing the rising price of beef.

International players have targeted Iran’s energy sector, the Islamic Revolutionary Guard Corps-Qods Force, and other areas of the economy. The oil and gas industry, the lifeline of Iran’s economy, has been particularly hit. The country holds the world’s third-largest proven oil reserves and the world’s second-largest natural gas reserves, according to the U.S. Energy Information Administration. Iran, however, must still look overseas for refining capabilities.

As U.S. sanctions against Iran’s oil and gas industry took hold, firms like Lukoil, Royal Dutch Shell, Total and Reliance stopped selling gas supplies to Iran. The government of Mahmoud Ahmadinejad, which needs Western technology to help modernize the energy sector, last March announced plans to seek a $200-billion investment in oil, gas and refinery industries over the next five years.

In another indication the energy sector is in trouble, the Revolutionary Guard has found it tough to drum up enough money to advance the so-called “peace pipeline,” which is meant to transport gas from southwest Iran to Pakistan and potentially India and Bangladesh, Hassan-Yari noted.

The South Pars gas field -- “arguably the most important” of Iranian gas undertakings – has not attracted Western investors either, added Alex Vatanka, a scholar at the Middle East Institute in Washington. The government, however, has dismissed the impact of sanctions on its stalled South Pars activities and argued that it does not need foreign partners, Vatanka told OilPrice.com.

“The timing is more than just a coincidence,” he said of the South Pars decision. “I think sanctions had something to do with how the Iranians went around and announced they’re going to do it alone and at home.”

Since then, Iran declared an intention to offer the first tranche of a $3-billion dollar domestic bond issue to fund the development of the South Pars field and will later make an international bond offering of two billion euros, according to an Aug. 15 Agence-France Presse report.

Liquefied natural gas, overall, may be in trouble. The government’s recent decision to put on hold LNG development was probably not initially its intention, said Vatanka. Iran’s closest rival in the gas industry is Qatar, a country doing “fine on the LNG front because they have access to money, technology and so forth,” he said.

Although Iran was trying to catch up to Qatar, “suddenly they’re throwing the towel in and saying they’re going to . . . go with pipelines,” Vatanka said. “I think it’s a reaction to some squeezing of Iran on the sanctions front.”

Despite the many countries joining the pro-sanction camp, Iran is not completely alienated. Earlier in August, China said it will invest $40 billion in its ally’s oil and gas sector. Only days ago Venezuela announced plans to ship gas to Iran, and Russia may boost fuel shipments to the country as well. Turkey, also dependent on Iran for natural gas, plans to continue its relationship, while Sri Lanka said it would extend a
crude oil deal with the Islamic regime.

It will be “tough to measure” the actual pain of international sanctions without a clear picture of the long-term impact of major energy project delays, Vatanka continued. Giving up a “crucial technology” like LNG because Iran cannot tap into needed Western expertise is a key example, he said, noting that the fuel represents Iran’s future energy prospects.

How long Tehran can weather such external economic pressure is uncertain.
Ahmadinejad is already waging internal battles with the nation’s conservatives. Not only are certain factions within Iran’s parliament at odds with him over his economic policies, the regime’s powerful clerics are critical about his handling of social issues like an appropriate dress code for women, Hassan-Yari, the Canadian academic, said. Some members of parliament have also taken aim at the president for a foreign policy
deemed “too adventurous,” yet they have not specifically mentioned sanctions, Hassan-Yari said.

Eventually, Ahmadinejad’s opponents may exploit the international community’s financial punishment as justification for a “more imaginative economic policy” in Iran, said Vatanka. He added that the president would have to go if he fails to deliver on this front.

“It’s that’s kind of scenario that I can see,” he noted, “if this fight continues among the hardliners.

Source: http://oilprice.com/Geo-Politics/...

By Fawzia Sheikh for Oilprice.com who focus on Fossil Fuels, Alternative Energy, Metals, Crude Oil Prices and Geopolitics. To find out more visit their website at: http://www.oilprice.com

© 2010 Copyright OilPrice.com- All Rights Reserved
Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules