From CTV News:

John Size, CTVNews.ca

Date: Mon. Feb. 20 2012 9:43 AM ET

Iranian plans to stop selling oil to European countries is a strategy being used by Tehran to not let the 'enemy' get the upper hand, a Middle East expert says.

"I think this gives Britain and France and other western powers something to think about because the original idea was that by July 1 crippling sanctions would be in place," Toronto-based Kamran Bokhari told Canada AM Monday.

The European Union agreed to stop buying Iranian crude July 1 under a round of new sanctions, but Bokhari said that was preempted by Tehran Sunday when its Oil Ministry announced shipments to the U.K. and France would end.

That caused oil prices to spike Monday to a nine-month high of US$105 a barrel. Oil prices were also affected by China's decision to boost its money supply to spur lending and economic growth.

About 18 to 20 per cent of Iranian crude is purchased by countries in the EU.

Bokhari isn't sure if the Iranians are bluffing, but what the move does say is the country's leadership isn't ready to "throw in the towel just yet."

It's also possible Iran is counting on the ban to bump world crude prices, Bokhari said.

"Everybody has an incentive to negotiate. The question is who is going to negotiate from a position of relative strength . . . both sides want that and obviously both sides can't have that to the detriment of the other," Bokhari said.

The oil export ban comes at a time when United Nations nuclear inspectors are in the Persian Gulf country attempting to determine if Iran is developing its own nuclear weapons capability.

The two-day visit is the second in less than a month by the International Atomic Energy Agency, reflecting the urgency over alleged weapons experiments by Iran, something the country has denied and refuses to discuss.

While Iran may be counting on oil prices to rise and force a compromise, it's also suffering economically from lower crude sales, Rasool Nafisi told Canada AM Monday.

An expert on Iran at Strayner University in Washington, D.C., Nafisi said the oil-dependent country is already trying to find a market for about 25 per cent of its crude.

With the EU not buying its oil, coupled with China dropping half of its orders, Iran needs new customers, possibly in South America, he said.

"I find it hard to believe that under the strict sanctions by western countries they can really find a new range of new customers," Nafisi said.

But there is a current shortage of crude on the market and perhaps the Iranians are counting on that to work in their favour, he added.

Both Nafisi and Bokhari believe a military strike on Iran is unlikely because both sides want to negotiate and it's in the interest of the Americans to reach a peaceful solution.

Bokhari said there's more at stake for the U.S. than just Iran's alleged nuclear weapons program.

It's really about the balance of power in the Persian Gulf, as well as stability in Iraq, the outcome of the Syrian uprising and American attempts to reach a compromise with the Taliban in Afghanistan, he said.

He also believes Israel won't go it alone with a military strike. It will work with the international community to find a resolution, Bokhari said.

"Nobody's in the mood to go down that military road because of the repercussions and the cost of that would be much higher than the perceived benefit," he said.

Meanwhile, France is shrugging off Iran's ban on crude exports to the country.

The Foreign Ministry said French oil companies have already stopped buying Iran's oil under EU sanctions adopted last month.

Link:
Tehran leveraging oil in dispute with West: experts | CTV News