Analyst warns of oil sanctions against Iran

Richard Lein said the US and EU sanctions against Iran's energy sector can trigger a recession in the eurozone and hit the global economy by dramatically lifting oil prices. In an article published in the Malaysian English-language newspaper New Straits Times on Monday, Lein wrote that Western sanctions have so far failed to halt Iran's nuclear energy program, "but have caused an oil price spike that could trigger a global recession." "Oil prices hit a record high in euro terms earlier this month and analysts now believe they may have already dragged the eurozone into recession," he added. He also pointed to US President Barack Obama's admission that rising tensions over the Islamic Republic have been "adding a $20 … or $30 premium to oil prices". According to the international accounting firm Ernst and Young (EY), a hike in crude prices to US $150 per barrel "would cause a recession of one per cent in the EU this year, double the milder 0.5 per cent contraction currently forecast", Lein said. After months of debates, the EU member states eventually reached an agreement in their meeting on January 23 to sanction oil imports from Iran and freeze the assets of Iran's Central Bank within the EU. Meantime, demand is growing for Iranian crude oil in Asian and African markets after the EU's fresh decision. Iran is currently supplying 100% of Sri Lanka's oil needs, 51% of Turkey, 25% of South Africa, 14% of Greece, 13% of Italy and Spain, 11% of India and China and 10% of Japan and South Korea's oil demands.