(Oil & Gas 360) – Last Friday, the Biden administration unveiled its official response to the October 1 attack on Israel by Iran by imposing harsh sanctions on the National Iranian Oil Company.
In addition to blocking oil exports, the increased sanctions include petrochemicals and elevated scrutiny and countermeasures to block “ghost ships” from the United Arab Emirates, Liberia, Hong Kong, and others who have been circumventing earlier U.S. sanctions to sell Iranian oil.
In addition to the State Department actions, the U.S. Treasury has designated sixteen entities and seventeen vessels as “blocked property,” meaning that assets are frozen, and unable to be transferred, monetized, or purchased unless first approved by Treasury’s Office of Foreign Asset Control.
The move appears to be an effort by the administration to keep Israel from bombing Iran’s oil facilities in retaliation for the October 1 missile barrage. President Biden has openly voiced his administration’s opposition to Israel attacking Iran’s oil infrastructure.
There are reports of some other Middle East countries asking the U.S. to pressure Israel from such action, afraid that Iran or its proxies would retaliate against their oil infrastructure.
Iran has warned several of its Middle East neighbors that those deemed supportive of U.S. and Israel’s efforts to battle the country would face repercussions.
Every oil-producing country in the Middle East monitors break-even prices to support social cohesion through spending on social programs, public finance, education, and infrastructure.
Youth unemployment remains a social risk throughout the region. Iran’s rate is slightly lower than the average regional rate of 25%, but Saudi Arabia’s is over 40%.
However, the latest sanctions may have little economic impact on Iran. The World Bank reports that the Iranian regime can sustain its economy, military, and social spending with break-even prices below $45 a barrel.
The World Bank puts the break-even point for Iran’s main oil exporting rival in the region, Saudi Arabia, at nearly $57 a barrel. The Saudis have been more proactive than their other Middle East neighbors in actively leveraging their oil wealth to diversify their economy through their Vision 2030 plan.
By Jim Felton for oilandgas360.com
