Has the European Union reached an agreement on the Iranian oil embargo? Will the price of oil be rampant?

On Tuesday (6th), it was reported that the European Union reached an agreement on imposing an oil embargo on Iran, stimulating the international crude oil price to further expand its rebound rate, and set a new high for the day. According to the analysis, if the EU really implements an oil embargo on Iran, international oil prices are expected to usher in a new round of arrogance.

According to the news, EU member states have reached an agreement on the implementation of the oil embargo on Iran. In the future, they will seek further support from other major powers.

A few days ago, the European Union had reached an agreement on some of the new sanctions against Iran, including 143 Iranian companies and 37 Iranians on the sanctions list. The new sanctions involved Iran’s financial, energy, and transportation sectors.

However, on the issue of whether or not to impose an oil embargo on Iran, EU foreign ministers have shown differences. A European diplomat said that the United Kingdom, France, Germany, and Sweden agree to sanction the Iranian oil sector. However, Spain, Greece, and Italy have a high degree of dependence on Iranian oil, so it is difficult to support sanctions against the oil sector.

Iran is the third largest oil exporter in the world, and it is one of the major oil supply countries in the EU. European Union data show that last year the EU needed to import 450,000 barrels of Iranian crude oil per day, while Iranian crude oil accounted for 5.8% of total EU imports. It is the EU’s fifth largest crude oil supplier, second only to Russia, Norway, Libya and Saudi Arabia.

Some analysts pointed out that once the news is true, the international oil price may usher in a new round of arrogance. Although it is not difficult for Europe to seek replacement of 450,000 barrels of crude oil per day, the key lies in the time it takes for other countries to fill the Iranian oil gap, and Iran may cut off the Hormuz strait, which accounts for 20% of global crude oil transportation, so the EU has triggered this. The chain effect is difficult to overlook.

International investment banks, including Goldman Sachs, have also seen more crude oil. Goldman Sachs predicted that Brent crude oil prices will climb to US$127.5 per barrel before the end of 2012. Another strategist predicts that oil prices may soar to $150 in the short term. The Iranian side is even more warned that if the European Union imposes sanctions on the embargo, the price of oil will collapse to $250, hurting the recovery of the global economy.

After measuring the $100 mark, international crude oil prices rebounded to a certain extent during the day. As of Tuesday's European market, NYMEX crude oil prices once again rebounded above the $101 level. Looking at the 4H chart, the short-term upward trend in oil prices has not been undermined, although Standard & Poor’s warned that 15 European credit ratings hurt investor confidence.