Sanctions on Iran: Is there a limit to their effect on Iran's oil production?
OPEC figures show a general decline in Iran's crude oil production after Iran was hit with economic sanctions this summer, according to OilPrice.com. But has the effect of the sanctions on Iran's oil production reached a limit?
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That protection allows those countries to continue making some crude oil purchases from Iran so long as the "significant" threshold is respected. Iran produced around 3.5 million barrels of oil per day last year, before sanctions honed in on the country's energy sector. The U.S. Energy Department's Energy Information Administration, however, expects production to fall to 2.7 million bpd this year and another 200,000 in 2013. Using information collected for the CIA's World Fact Book, that decline could theoretically knock Iran out of the Top 10 in terms of yearly crude oil production.Skip to next paragraph
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Qasemi, however, said sanctions weren't impacting the country's oil sector in the way Western governments had expected. Oil production in the Islamic republic for this year, he said, should remain at about the same level as for 2011. Using OPEC's figures, Iran has so far averaged around 2.9 million bpd, in line with EIA expectations. The minister said Iran's supplier base remained intact, however. (RELATED: Thousands of Bombs Dumped in Gulf of Mexico Pose Huge Threat to Oil Rigs)
"Iran's crude is being supplied on the world markets and Iran has its traditional buyers," he said.
Despite the pressure, however, Iran is keeping some of its market activity going. Given Clinton's acceptance that at least some of Iran's oil is needed to keep markets moving, it's unlikely that Tehran would stay out of the Top 10. The global economy last year was squeezed when Libya, No. 15 based on CIA production figures, was shut out by war. Though concerns over Iran's nuclear activity are warranted, it appears that current sanctions on oil have reached the high-water water mark in terms of effectiveness.
"Sanctions, when we look at history, rarely work," argued U.S. Sen. John McCain.
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