Under pressure
January 23, 2012
Claudia Kemfert is an energy expert from the German Institute for Economic Research (DIW) in Berlin.
Deutsche Welle: How big of a threat is an oil embargo for Iran?
Claudia Kemfert: I think Iran will suffer a lot, because it depends heavily on oil exports for income. Some 50 percent of all government income comes from oil exports. If you combine that with the financial constraints that are also planned, Iran will suffer a lot.
Which countries would be most affected by an Iranian oil embargo?
Iran exports especially to Europe. But Europe could substitute it with other imports coming from Norway or Russia. And Iran also exports to Asia - China - and also a little bit to the United States. So the question remains whether China will keep to this embargo and not import more from Iran, which would not help.
What about Greece? It's a big customer, and it's in a tricky situation at the moment.
Yes, Greece imports a lot from Iran, as does Italy. But I think we could look for other sources - especially Russia, but also Saudi Arabia. We have an oversupply on the international market, so I really don't think it will be a problem.
What about the price of oil?
The price will increase, of course. In the past we've seen, in similar situations with Iran, that the price increased. So I think there will be an increase, even though there is an oversupply in the market. The market is relaxed and we have a difficult economic situation. However Iran is a very important player on the international oil market, so I think the price will increase.
Could Iran really compensate for an EU embargo by selling its oil elsewhere?
Yes it could, if China would substitute, it could sell it to somewhere else. But that would not help because we really need to pressure Iran and have this embargo yield a solution.
Tehran has responded to the embargo by renewing threats to block the Strait of Hormuz. What would that mean for international oil supplies?
It is a very, very narrow stretch of water. About 40 percent of all oil deliveries have to pass through it, which means it's very important. In the past, the mere threat of such a blockade has caused oil prices to shoot upwards. But it's unclear whether those threats are likely to be realized. The United States has already said it would intervene in the event of a blockade. It would also cause considerable harm to Iran's own economy, because its exports wouldn't be able to pass through the strait either.
Interview: Ben Fajzullin / sje
Editor: Gabriel Borrud