Article written by guest writer Rin Mitchell
What’s the Latest Development?
Almost a month ago, the United States requested that countries stop purchasing oil from Iran, as an attempt to put pressure on Iran to curb its nuclear ambitions. Iran gets nearly 80 percent of its revenue from oil, but since the U.S. sanctions—the demand has been cut pretty drastically. So in other words, the world is still turning and oil markets aren't looking disturbed. “That’s mostly because we’re swimming in crude as it is. Saudi Arabia is overproducing. Iraq just passed Iran as OPEC’s second-largest oil producer. Libya is back. And production in the U.S. is rising faster than anyone thought.”
What’s the Big Idea?
The United States carrot and stick method has been working to sanction Iran. Countries have curbed spending with Iran, which cut down their exports of barrels per day by more than what was expected. Yet, the oil markets are still producing with little input from Iran. Not to mention, “U.S. oil production is up 14.2 percent over the last 12 months. Not that we export any of that oil. But gains in domestic production have lessened our need for OPEC oil, meaning it’s free to find other markets such as China and India.”