The Oil Prices and Nuclear Case of Iran

Oil Transportation Map

The main reason for the major increase of the oil prices from less than thirty dollars a barrel to over sixty dollars a barrel during the last couple of years has nothing to do with the nuclear crisis of Iran, the insurgency in Nigeria, the political developments of Nicaragua, the hurricanes in the USA, the decline in construction of the oil refineries due to low incomes, the US presence in Iraq and Afghanistan, and the policies of the OPEC.

The single major reason for the sharp increase of the oil prices is development. The economy of the world has witnessed progress in the last couple of years. US, China and India, Latin America, and others are thirsty for oil due to the rapid development. The great scope of development in the world has changed the balance of the demand and supply for oil. The wave of industrialization in many countries all over the world has created huge demand for oil and this has resulted in the fundamental increase in the oil prices.

However, the elements that were mentioned in the beginning of this piece, including the nuclear case of Iran, are not innocent. They have some effect on the increase of the oil prices. Although they are not the reason for a major part of the increase in oil prices, they keep the market volatile, and keep the tension high.

It seems that the oil market is too sensitive these days. First of all it reacts to almost any political and economic event in any part of the world. Secondly, it always looks at the events in the worst possible way. The countries like Iran have always been in crisis. The OPEC is full of the countries with unstable, undemocratic and even backward and reactionary countries. They have always been full of various important problems and no one cared in the past to increase the prices of oil due to them.

But last year, the news of a small explosion, almost a hundred miles away from the construction site of the Iranian Nuclear Power plant in Bushehr, which is not complete yet and due to the Russian policy it does have any nuclear fuel, gave rise almost one dollar to the oil prices. The sensitive oil market had guessed that perhaps it was the explosion of the Iranian power plant due to the attack of Israel or the USA, or both of them. Later it turned out clear that some construction workers had made the explosion for construction of a road.

At the same time, the oil market does not show much patience for the long-term results of the international events. The oil market, as soon as it gets the news of something, takes the most extreme and negative option. If there is a quarrel between Iran and the West on the nuclear issue, each time that Iran takes a step in the direction that the West doest not like, the oil market starts thinking of the American missiles hitting targets in Iran and Iranians firing missiles to the oil facilities of the Persian Gulf states and even the start of the third world war.

The way that the oil market is reacting to the events of the world these days creates a notion that perhaps the oil market knows something that many people don't see them. Perhaps this is due to the connection of the oil with important persons who have access to important information.

Another important and interesting issue regarding the oil prices is that many experts predicted the oil prices over 60 dollars will devastate the economy of the world and a recession will take over all over the world. It is almost a year that the oil prices have not gone under sixty dollars and it seems that the international economy has not made much complaint.

The reality is that many things can happen in future to make the balance of the supply and demand more disturbed. For example, if the news of the possible sanctions against Iran sends the price a couple of dollars higher, then the real cutting of the Iranian oil from the make will possibly make the prices to go up in the range of 80 to 120 dollars.

The tension of the oil market is rooted in the prospect of terrible incidents that makes the prices get out of control. Under such circumstances, the prices will not know any range. This is a recipe for war of oil. The countries of the world "addicted" to oil and their industries thirsty for oil will engage in a cutthroat competition for access to oil resources.

Iranian