The price of crude oil and petroleum products reached a high in the international market last August 21st after Iran announced that it is continuing efforts to enrich uranium. Iran's statement and actions are direct contradictions to a United Nation resolution which bans uranium enrichment. As a mineral, uranium is an essential component of nuclear devices and weapons of mass destruction. Through its actions, the Iranian government risks possibly severe economic sanctions. However, the repercussions of Iran's action are felt in the global market as the prices of manufactured goods went higher.



The administration-supported Iranian Students News Agency reported that Ayatollah Ali Khamenei, Iran's leader, ruled out propositions to suspend nuclear activities. In response, the UN allowed Iran a two-week allowance to suspend the program in exchange for incentive offers. If Iran does not submit by August's end, the UN will undoubtedly resort to its international powers to stop Iran by itself. Meanwhile, the international trade community and the world market remain in check as both await Iran's decision regarding the incentive offer.

The reports are not promising according to Tom Bentz, an analyst from BNP Paribas Commodity Futures. He asserts that the signs and the hints all point to the eventual rejection of the UN incentive offer by Mahmoud Ahmadinejad, Iran's president. Indeed, if past incidents are to be considered, Iran's past statements about UN sanctions involved threats about using oil against the international trade community. Iran produces almost 5% of the oil used worldwide. If Iran does use the oil threat, it will not be the first time that they will undermine the authority of the UN. Likewise, it will not be the first time that the world market will be jeopardized by the rising oil prices.

Some countries likely to be affected by the increase in oil prices are China, India, the European Union, the US, and most Asian countries. In recent developments, crude oil delivery rates for September rose from $71.14 to $72.45 per barrel, according to officials from New York Mercantile Exchange. The October rates are worse off at $73.30 per barrel. Since most of the international trade community's economic activities involve industrialization efforts, oil and power are essential requirements.

Without oil or with the increasing oil prices, manufactured goods like cars, electronics, clothes, and packaged goods are facing price increase. With the imminent oil price increase, transportation groups are also clamoring for fare hikes. The Western powers, lead by the US, expressed its suspicion that oil nation is only using the oil threat and atomic program to develop a weapon. Iran, for its part, counters that the US is only trying to turn the tides in retaliation to Iran's move to price its oil in euros. The pricing move by Iran last year downsized the value of the US dollar in the international trade market. However, the word war between the countries is a trivial thing compared to the damage another oil price increase can inflict to the world market. As of now, economic activities by the international trade community hang on a fragile balance as August 31st draws near.