U.S.-led sanctions against Iran are costing OPEC's third-largest producer $133 million a day in lost sales without raising global crude prices, handing President Barack Obama an election-year foreign-policy victory, Bloomberg reported.
Shipments from Iran have plunged by 1.2 million barrels a day, or 52 percent, since the sanctions banning the purchase, transport, financing and insuring of Iranian crude began July 1, according to data compiled by Bloomberg. Annualized, that would cost President Mahmoud Ahmadinejad's country about $48 billion in revenue, equivalent to 10 percent of its economy.
Enlarge image Iranian President Mahmoud Ahmadinejad
Francisco Blanch, head of global commodities research at Bank of America Merrill Lynch, talks about the outlook for commodities. He speaks with Tom Keene and Scarlet Fu on Bloomberg Television's "Surveillance."
Harry Tchilinguirian, head of commodity markets strategy at BNP Paribas SA, discusses the outlook for oil and U.S. natural gas. He speaks from London with Guy Johnson on Bloomberg Television's "The Pulse."
While Iran's threats to disrupt the flow of oil through the Persian Gulf sent crude to a three-year high in March, increased production from Saudi Arabia, a U.S. output boom and the slowing global economy have left prices 1 percent lower in 2012. That's helping Obama avoid steeper domestic fuel costs before the November presidential election. Iran has to contend with a weakening currency and rising unemployment.
"It's been an unqualified success," Mike Wittner, head of oil-market research for the Americas at Societe Generale SA, said in a telephone interview from New York on July 25.
"There were a lot of concerns sanctions could backfire by causing an oil-price spike, but in the end the U.S. and Europeans got their cake and they ate it too, because volumes are down and prices are down."