Do oil trade sanctions work?

[Elok]

http://www.bbc.co.uk/news/world-middle-east-16418589

Lazy link-snubbing person's summary: EU officials have agreed in principle to a ban on the import of Iranian crude. If the ban is actually approved, it will still take months to implement. Oil prices have already risen.

Is this going to do anything? The article claims that if Iran turns to Asian countries to export the stuff, they'll demand a discount, according to some BBC employee named James Reynolds. This may be true, but, like I said, oil prices have already risen--so it's unclear if this will have any net impact beyond making EU residents pay more at the pump. If China et al do NOT demand a discount...here ya go Iran, we boosted the value of your chief export for you. Don't pursue nuclear energy any longer or we'll start seriously saber-rattling and raise it again.

[giblets]

I don't see why it would have much effect of China doesn't participate in the sanctions.

[SlowwHand]

It will have an effect if all abide by it. If China would join in, it would be a done deal, but they can be broken without China.

[dannubis]

In short, no.

What might help is not giving the Iranians a bloody excuse to get them each time the occasion presents itself.

[Dinner]

Not at all.

http://en.wikipedia.org/wiki/Fungibility

[Dauphin]

They would need to be sanctioned by enough countries that demand won't be picked up elsewhere.

[Dinner]

They would need to be sanctioned by enough countries that demand won't be picked up elsewhere.

China has specifically said they'll take any and all Iranian oil and natural gas exports. They want those resources badly. The truth is there are tons of markets/countries which will buy it and have the money to buy it.

[Elok]

Yeah, that's pretty much what I figured. So, is this just a move by the EU to look Tough On Religious Extremism (I assume it's not kissing Israeli butt, that's our disease), or is Brussels run by total dipwads? I don't really know much about the EU.

[dannubis]

Dipwads.

They are politicians after all.

[HalfLotus]

They work at making military confrontation more likely when both sides have less to lose economically.

[Dinner]

http://www.nytimes.com/2012/01/07/world/middleeast/amid-pressure-on-oil-iran-plans-new-round-of-military-exercises.html?_r=1&hp

That's modest good news. South Korea and Japan have said they will attempt to decrease oil imports from Iran after Iran threatened to close the Straights of Hormuz to tanker traffic. Unexpectedly China has also slightly decreased imports from Iran though I don't know if that's due to fluctuations of supply & demand in China itself (their economy is slowing down) or if they're intentionally doing it to influence Iran to be less adversarial. Some analysts are saying this could just be a business move by Chinese companies; cutting back on long term contracts in favor of short term ones because they expect US and EU sanctions to force Iran to sell oil more cheaply to China so they're waiting to see prices fall before signing contracts.

[Wezil]

China has specifically said they'll take any and all Iranian oil and natural gas exports. They want those resources badly. The truth is there are tons of markets/countries which will buy it and have the money to buy it.

At a discount.

That hurts the Iranian regime.

[Dauphin]

Why would you think there would be a meaningful discount?

[Wezil]

Why would you think there would be a meaningful discount?

I was reading about it a couple days ago (can't be arsed finding a link).

If the EU stops taking Iranian oil they will have limited buyers left. The Chinese will buy it but only if they get it cheap. Their recent move away from Iranian oil is seen as pressure on Tehran to agree.

[Dauphin]

If oil cost even $1 a barrel less to buy from Iran than the RoW (after shipping etc), then the Chinese would buy. I don't see why they wouldn't unless they wanted to take an implicit part in the sanctions.