Iran oil ban to drag eurozone economy into recession

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, an economic analyst says. 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,” wrote Richard Lein in an article published in the Malaysian English-language newspaper New Straits Times on Monday. “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 US $20 … or US $30 premium to oil prices.” According to the international accounting firm Ernst & 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 pointed out. This is while recent data released by the Joint Organization Data Initiative (JODI) shows that Iranian crude export has increased in January despite sanctions imposed against the country’s oil sector. On the New Year’s Eve, Washington imposed new sanctions on Iran and accordingly penalize countries for importing Iranian oil or doing trade with its central bank. EU foreign ministers also approved sanctions against Iran’s oil and financial sectors on January 23, including a ban on Iranian oil imports, a freeze on the assets of the country’s central bank within EU states, and a ban on selling grain, diamonds, gold, and other precious metals to Tehran. The measures have been adopted with the professed aim of pressuring Iran into abandoning its nuclear energy program, which the US, Israel and some of their allies allege has military dimensions. Tehran has, however, refuted the allegations, arguing that as a committed member of the International Atomic Energy Agency (IAEA) and a signatory to the nuclear Non-Proliferation Treaty, it has the right to develop and acquire nuclear technology for peaceful purposes. Iran also maintains that the IAEA has never found any evidence of weaponization in its frequent inspections of the country’s nuclear facilities.