How one change in oil will affect us all.

Oil is the blood of our nation, and to some extent, our world. Without it, our standard of living would be significantly altered, for the worse.

That is why, when one of the big producers of oil will be boycotted, consumers will be the ones punished.

Barack Obama has made the sanctions on iranian oil even stronger. He has completely stopped buying iranian oil, and is putting more pressure on other countries in an attempt to force Iran to give up its nuclear program. Basically, he is forcing countries to choose between importing oil from iran, or doing business with the US.

China, one of the biggest consumers of oil, has decided not to boycott Iran, believing that the US does not have a right to punish other nations like that. This should be a relief in oil prices; it should reduce the amount of demand overall, which would help the prices a small amount because china is such a big consumer of iranian oil. All the other countries have cut down on oil importation from iran, or completely stopped importing oil, under the threat of sanctions from the US. China just isn't scared of us.

Analysts are expecting a 20% spike in oil prices. This spike can be explained by a simple demand/supply graph. If the demand remains constant, and the supply curve shifts to the left, the prices will increase. In this case, the 2.2 million barrels of oil decrease in oil will result in a 20% increase in prices for consumers. To make up for this, the federal government is trying to pump more oil out of Saudi Arabia and tap into reserves, but doing these two things would mean that in the account of any other reason for shortage, we would be in a lot of trouble.

All us consumers can do is hope that the US forgives Iran soon.

Source: U.S. tightens oil sanctions on Iran: http://money.cnn.com/2012/03/30/news/international/Iran-sanctions/?npt=NP1