Publications: Notes at the Margin

Sanctions: A Hobson's Choice; Also, If There Must Be a Fight over Hormuz, Let It Be in February (January 9, 2012)

 

In our last report, we missed two things. First, we failed to recognize that the Petroplus shutdown would squeeze the European gasoil market and prompt a bidding up of crude prices. However, this was not the major error. The main mistake was ignoring the impact of Section 1245 of H.R.1540, the National Defense Authorization Act for Fiscal Year 2012, signed into law by President Obama on December 31, 2011. This report addresses these two issues in detail. The sanctions will force countries that import oil from Iran to look for other sources, putting pressure on crude prices. Petroplus's troubles indicate a problem that may affect the entire oil industry, a situation that may, ironically perhaps, take pressure off crude prices.

 

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