Oil, Iran and the West
Oil prices ended down Tuesday after opening sharply higher in a market weighed down from the speech by an officer of the Federal Reserve of the United States (Fed) questioning the effectiveness of the latest stimulus from the institution.
Crude oil futures in New York did not go positive into the green all morning, supported by fears of lower supplies of black gold, as tensions between Iran and Western countries grew.
The Iranian economy (which is heavily dependent on oil) is showing signs of weakness under the pressure of Western sanctions, while President Mahmoud Ahmadinejad is set to deliver a speech on Wednesday to the General Assembly of the United Nations.
The Iranian currency fell more than 4% in less than 24 hours, while unemployment grows, inflation breaks records, and thousands of workers complain of not having been paid. Government initiatives are to maintain the value of the rial but also the level of oil exports have failed.
President Ahmadinejad himself has acknowledged that Iran is facing “problems” to sell its oil, which represents almost half of the budget of the government. But he insisted that the country was able to cope with the situation.
However, the population is suffering directly from the sanctions which are reflected in particular by a sharp rise in food prices. Some 20,000 workers sent a letter to the Minister of Labour Abdolreza Sheikholeslami to complain about not being paid and to ask for a salary increase of $120 to $285, saying they are “under the poverty line.”
Good figures on housing and consumer confidence bodes well for the recovery of the economy and the demand for petroleum products in the United States had initially confirmed this upward trend. But operators have responded to comments from the President of the Philadelphia Fed, Charles Plosser, who explained why he was opposed to new monetary stimulus decided by the central bank.
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