As the United Nations mulls additional sanctions against Iran over its nuclear program, experts contend those already in place could impose harsh consequences on the global oil trade.
Bloomberg reports that tensions between the U.S. and Iran have continued to intensify over the past week, with the Middle Eastern nation ratcheting up its criticism of the U.S. The U.S. has urged other countries around the world, particularly China and Russia, to back sanctions against Iran's internationally condemned nuclear program, but the nations have been loath to do so.
The sanctions are already impacting Iran as they target oil, the country's main source of income. Oil supplies account for more than 50 percent of Iran's national budget, with the commodity bringing in more than $56 billion during the first seven months of last year, according to the U.S. Department of Energy. The sanctions could drive up the price of oil for Iran and its trading partners, which could ultimately have repercussions throughout the world.
Higher oil prices in Europe or Asia could weigh on businesses, preventing them from implementing cost reduction initiatives. Moreover, they could cause oil prices to rise in the U.S., as those previously supplied by Iran shift oil sourcing under international and diplomatic pressure.
On the New York Mercantile Exchange on Monday, oil futures for March delivery ended the day at $96.91 per barrel.