It’s too soon to say when, or whether, the long-simmering dispute over Iran’s nuclear program will erupt in armed conflict. “There is still a window that allows for a diplomatic resolution,” Obama said before meeting with Israeli Prime Minister Benjamin Netanyahu on March 5. A raft of Western economic sanctions against Tehran, including a looming embargo on Iranian oil exports to the European Union, has made the country’s rulers more willing to “recommence negotiations without preconditions, which isn’t something they were amenable to last year,” according to Karim Sadjadpour, an Iran analyst at the Carnegie Endowment for International Peace. War with Iran in 2012 “is plausible but not probable,” he says.
The economic case against war is strong. Jitters about instability in the Middle East have caused the price of Brent crude to rise some 9 percent since the beginning of the year. Even a limited conflict with Iran—the second-largest oil producer in the Organization of Petroleum Exporting Countries, after Saudi Arabia—would jack up insurance premiums on oil tanker traffic through the Persian Gulf. Iran exports 2.5 million barrels per day, and OPEC lacks the spare capacity to make up for the likely loss of Iranian supply in the event of an attack, according to Robert McNally, president of the Rapidan Group, an energy consulting firm. That’s a formula for an oil shock far more painful than what global consumers are currently experiencing. “What we see now is a market that is very fearful and very tight,” says McNally, a former senior director for international energy at the National Security Council. “In those conditions, it doesn’t take much to send the cost of oil soaring.”
Read more here: The Economic Fallout from Bombing Iran
http://www.businessweek.com/articles/2012-03-08/the-economic-fallout-from-bombing-iran
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