Not even graphic pictures of bloodied demonstrators—who have been questioning the avowed re-election of Iran president Ahmadenijad—which have been streaming out of the Islamic Republic despite a clampdown on foreign reporting, could stem the decline.
While democratic proponents and civil liberties workers throughout the world have been watching the political and social developments lately, economists and business leaders have been scouring the market horizons for any signs of an oil price spike.
There ain’t any. It is unlikely that there will be, as a result of the tumultuous events on the streets of Tehran.
The concern is real since Iran is a major crude oil supplier to the world. Logic tells us that should the unrest spreads around the country, it could lead to shutting off the Iranian oil taps from its ports.
But the scenario is unlikely.
Revenues from its oil exports lubricate Iran’s economy, and its entrenched leaders would be ill-advised if the country leverages its oil production for concessions from the outside world. More so now that nagging questions about the veracity of election results, which have been violently expressed on the streets, could lead to more dollar shortage to the Iranian regime.
Whether by force or design, any stoppage of oil deliveries from Iranian ports would at best only cause a blip on world oil prices. Other OPEC countries which have been reining in its own oil production in hopes of improving prices, would gladly take the slack of Iranian oil.
Iran needs oil exports badly that it is finding ways to develop other sources of energy in lieu of oil.
Iran has been insisting that its nuclear program is basically for power production and for other peaceful purposes; and there are reasons for believing that it is so. As a scientist, I have visited the Iran’s atomic energy agency in the late ‘90s, and their world class scientists were more inclined to study non-weapons applications like isotopes production for agricultural and hydrological studies and nuclear power engineering.
They would rather have a large electrical generating plant powered by nuclear fuel than a plutonium enrichment plant. And the oil revenues saved could go a long way towards lining up the state coffers.
And why would the Iranians insist on developing its limited geothermal resources, like the one at Sabalan mountains northeast of Tehran, when it is far easier and cheaper to drill for oil on its vast untapped oil resources to obtain an equivalent amount of electrical power?
With the ugly turn of events on Tehran streets, one would have expected that the president of Iran’s nemesis, the United States, which regards itself as a bastion of democracy, would jump at the opportunity of bashing the Islamic republic. But no; U.S. President Barack Obama’s response to the unfolding events has been muted.
As if returning the complement, Iranian authorities have singled out the U.K.—not the “great Satan” the U.S.—as the prime “meddler” of the country’s internal affairs.
No, the turmoil in Iran wouldn’t cause a spike, or even a slow rise, of oil prices.
Oil prices, as well as stock markets around the globe, have been steadily rising since October of last year mainly due to hopes of recovery for the global economy. Now that signs of economic recovery are more like a mirage on the desert sun, the steady rise in oil prices is beginning to stall and major bourses have begun to take severe pounding lately.
