US unilateral sanction. especially the ones to be imposed on the countries oil industry. will be very harmful to the economy of Europe. wrote the Bloomberg on Sunday.
`With these latest moves. American intentions are clear: cut off Iranian oil from the market entirely and reduce Tehran’s financial power. As oil prices rise. however. the White House’s policy looks set to hurt more countries than just Iran. Will Europe’s economies take the hit – or will they fight back?` wrote Bloomberg.
Saying that. with a daily production of 4 million barrels. Iran is the world’s third largest oil producer within OPEC after Saudi Arabia and Iraq. the article added. `As Tehran has already warned. OPEC capacity will be unable to meet shortfalls if the US pursues its policy of reducing Iranian oil exports to zero.`
`The risk is that any constraints on Iran’s exports will only further drive up prices and create major headwinds for the economy of major oil consumers. By law. the US must ensure the global oil market is well-supplied before issuing sanctions on Iranian oil exports. But in light of current demand. this might be a tough argument to land – especially since more oil supply shocks can be expected: Venezuela is struggling. and an agreement between OPEC and Russia is curbing daily oil production by 1.8 million barrels. compared to 2017 levels.`
The Europe is reliant on oil imports for 98 percent of demand. and with the Euro continuing to perform poorly against the Dollar. the impact of rising prices will only be magnified. Higher oil prices are hitting Germany. the continent’s economic powerhouse. especially hard. Bloomberg wrote.
Germany`s export-based economy is highly vulnerable to commodity shocks. which lead to higher unemployment because they drag down industrial productivity.
Washington’s foreign policy is clearly increasingly at odds with Europe’s core interests. US President Donald Trump’s flurry of sanctions should be seen for what they are: `an existential threat to the EU and to the countless firms that hold up the struggling Eurozone.`
One can only hope the Europeans will not waver in their determination to stand up to the White House.