Europe Punts on Iranian Oil Sanctions, Crude Prices Fall

The European Union has indicated that a delay in adopting more sanctions against Iranian oil may last six months while European nations seek alternate sources of supply. The news caused the price of Brent crude to fall -1.4%. The delay coincides with a planned visit by the international nuclear regulatory agency to Iran to discuss the country’s nuclear development program.

While anything that reduces tension in the Middle East is a good thing, the EU’s delay is really not much more than kicking the can down the road. Because crude oil is fungible, European nations that currently import crude from Iran could re-arrange their imports to be sourced from somewhere else, leaving Iranian oil to go to, say, China.

Brent crude is now down -0.68% at $110.50/barrel. WTI crude is currently trading at $98.67/barrel, down about -0.43%.