This week in New York, key world leaders plan to meet again to consider the effects of oil sanctions against Iran.
The aim, as always, is to pressure Tehran to cease its suspected nuclear weapons activity. Sanctions include an import ban by the Europeans, and American threats to punish insurance companies, banks and tankers that link Tehran to global oil customers.
The efforts have thrown sand in the gears. Iranian oil exports have halved, to about a million barrels a days. Still, energy consultant Robert McNally at the Rapidan group notes Tehran has responded by pumping less oil, tightening world supply.
“They’re raising oil prices for everybody,” McNally says. “But the pain they’re feeling is not yet enough to get them anywhere close to conceding with regard to their nuclear program.
So now – with higher oil and gasoline prices — drivers around the world are hurting, too. Who blinks first?
Certainly the Iranian people are suffering: the currency has fallen by half, and inflation is rampant. Yet it doesn’t necesariliy follow that Iranian leaders will admit it hurts.
“That might lead them to calculate that ‘hey, we have to show we’re tough. Because if we come to the negotiating table now, then the West will think the sanctions are having an effect. And they’ll just tighten them more and more.'” says energy consultant Robin Mills in Dubai.
Mills thinks Tehran will wait out the U.S. election before taking action. That way, it will know exactly who it’s dealing with.