Europe's oil standoff
In the wake of recent sanctions placed on Iran, oil tankers passing through the Strait of Hormuz will get an international military escort.
In this European debt crisis, we’ve heard one piece of conventional wisdom over and over again: “It’s hard to get 17 countries to agree on anything.” Today, we found out that’s not exactly true. The European Union is united on imposing sanctions against Iran, as part of the effort to prevent Tehran from developing its nuclear weapons program. The EU says its refineries will stop buying Iranian crude as of July 1, 2012. Warships are now in place in the Strait of Hormuz in the Persian Gulf to protect the oil tankers that pass through. The question is, can Europe afford to add oil to its list of current troubles? Carl Weinberg is the chief economist of High Frequency Economics in Valhalla, N.Y. He says the boycott of Iran's oil is a sign of how concerned Europe is about Iran's nuclear program. Weinberg says Europe is going to end up buying oil from the Middle East, western Africa and Russia. Still, Weinberg says, "We have to remember that Europe is not the whole world." He likens the global systems to a six-cylinder engine -- the U.S. is part of a machine that includes Europe, Asia, China, Latin America and India. So, while Europe falters, the engine will sputter but not die.