The Peak Oil Crisis : Iran

At the minute, the most serious of the several threats facing the world's oil supply is clearly the Iranian situation. Iran's leadership is determined to start a uranium enrichment program. Tehran claims it is for electric power, but the US and Europe say "nuclear weapons." To make matters worse, nearly every major world power (and numerous minor ones) has a finger in the Iran pie either as an actual or potential customer for Iranian oil, or as a friend or foe of Tehran.

The important new factor in this crisis, however, is the lack of much spare oil production capacity anywhere in the world. There certainly is not enough to offset the 2.4 million barrels a day Iran is currently exporting. Thus, for the first time we are seeing the threat of a completely new kind of economic embargo called "who gets hurt the worst" - the world economy, or the one embargoed. Both sides are aware of this situation with Tehran threatening to send world oil prices to over $100 per barrel if anyone interferes with their enrichment program. The US spokesmen seem to be saying that we must pay any economic price to keep the Iranians from nuclear weapons.

From a peak oil point of view, however, stoppage of Iranian exports would be a seminal event. Oil prices obviously would be driven higher. Whether they get to the "serious damage" level is hard to say because so many factors go into shaping the price of oil. Given that we are very close to peak oil, it is quite possible a major stoppage of Iranian exports could play a significant part in the actual event.

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