Sanctions hitting Iranian oil production hard
An Iranian motorcyclist takes the pumper to pump gasoline at a petrol station in downtown Tehran. The country's oil production has already fallen because of U.S. sanctions.
Jeremy Hobson: Iran is feeling the effects of U.S. sanctions over its nuclear program. The International Energy Agency says Iranian oil exports have fallen to a ten-year low. That may be good news for foreign policy types in Washington, but perhaps not so good for the global economy.
As Marketplace's Stephen Beard reports from London.
Stephen Beard: The IEA says that Iran's oil production has fallen by 50,000 barrels a day, as U.S. sanctions begin to bite. But that's nothing. The Agency says that by the time the European Union's embargo also comes into effect this summer, Iranian output could fall much further -- perhaps by as much as a million barrels a day.
This will pile unprecedented pressure on Iran. Oil accounts for 80 percent of its exports, and provides one half of its government revenues.
But says Nick McGregor, an oil analyst with brokers Redmayne Bentley, the dwindling Iranian output is raising fears about global oil supplies.
Nick McGregor: If anything major were to happen to disrupt another significiant supplier , then there is the question at the moment as to whether or not there would be adequate supply to meet what is - even in these tough economic times - record demand.
Oil prices have already risen by 20 percent since last December. Some economist fear further price hikes could derail the U.S. recovery.
In London, I'm Stephen Beard for Marketplace.