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Oil Surges as Showdown With Iran Looms: Obama Faces “Wildly Unattractive Options,” Haass Says

Aaron Task
Editor in Chief
Daily Ticker

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Rising oil and gas prices pose the biggest threat to the economic recovery and, perhaps, President Obama's reelection prospects. On Monday, crude prices surge 2.2% to $105.23 per barrel; it was the biggest gain in six weeks and certain to keep upward pressure on gasoline prices, where the national average now tops $3.90 per gallon.

The surge in energy prices in the past six months has been due, in no small part, to the rising potential for conflict with Iran.

On Friday, President Obama approved new sanctions on Iran aimed directly at their oil revenues. The White House concluded there is sufficient supply of oil in the world market to offset tougher restrictions on Iranian exports. But it's a high stakes gamble for the President, especially in an election year, over an issue for which there are no easy choices.

"If you act [militarily] it's fraught with potential costs and risks," says Richard Haass, president of the Council on Foreign Relations. "If you don't act -- if you end up in a world where Iran has a nuclear weapon, that's a world which is extraordinarily filled with costs and risks."

Those are "two wildly unattractive options," says Haass, who believes the pending negotiations with Iran are the last opportunity to avoid either outcome. "We'll learn very quickly whether there's any chance if negotiations can yield an acceptable outcome."

To Haass, a former director of policy planning for the State Department, an 'acceptable outcome' means Iran agreeing to a "real ceiling" on what it can do with nuclear energy and "intrusive
international sanctions" to ensure the U.S., Israel and other allies that Iran is keeping its end of the bargain.

Haass believes the odds are "roughly even" that war with Iran can be avoided and predicts "we'll know somewhere over the next few months the possibility of whether the negotiations will bear fruit."

This being an election year, President Obama has taken a lot of heat from Republican presidential hopefuls for not being more forceful in preventing Iran from obtaining nuclear weapons. But Haass, who served in President George H.W. Bush's administration, says Obama has "handled things pretty well" so far.

"I wish he'd been more forceful in supporting the Iranian opposition several years ago, but…right now, I'm pleasantly surprised with the breadth and depth of sanctions in place," he says.

It's already been a tough high-wire for President Obama, who is rapidly approaching the moment of truth for dealing with the Iranian situation -- one way or another.

Aaron Task is the host of The Daily Ticker. You can follow him on Twitter at @aarontask or email him at altask@yahoo.com