Oil+prices+spike+on+Iran+halt.

//**REMEMBER: DO NOT SUMMARIZE THE ARTICLE!!!**//

=TITLE OF EXTRACT:= OIl prices spike on Iran export halt. Is $4 gas next?

=SOURCE:= CNN: Money http://money.cnn.com/2012/02/20/markets/oil_gas_iran/index.htm?hpt=hp_c2

=DATE EXTRACT WAS WRITTEN:= February 20th, 2012

=DATE CURRENT EVENT WAS WRITTEN:= February 21st, 2012

=EXPLANATION OF THE ECONOMIC THEORY RELATED TO THE ARTICLE:= The economic theory presented in this article is the concept of supply and demand. After European Union and United States imposed economic sanctions upon Iran, the Iran oil ministry cut off oil supplies to British and French companies. Although Iran isn't the only place the countries get their oil from, it is still one of the major suppliers. Therefore, a cut off on Iranian oil import is a significant decrease on oil supply for the British and French companies. Following the concept of supply and demand, a decrease in supply means the resource has just become more scarce for companies, therefore the remaining oil supply for companies would cost more. The price increases because oil has an incredibly inelastic demand, which means the price would increase significantly even with just a little decrease in supply.

=VOCABULARY TERMS AND DEFINITIONS:=
 * Demand: consumers' quantity demanded for a certain product.
 * Supply: Quantity produced by producers for a market.
 * Benchmark: A standard or point of reference against which things may be compared to.
 * Sanctions:a threatened penalty for disobeying a law or a rule

=DIAGRAMS:=

=EVALUATION:= The decrease in supply and increase in price ultimately affects not only the consumers but the producers (companies) themselves, especially the British and French oil companies. The negatives to this issue are that consumers are paying more for the same quantity and quality of oil, British and French companies are also forced to bring up their prices in order to maintain at least normal profits. Even though oil has an inelastic demand, there are many companies that supply oil, and there are definitely some companies that aren't affected too much by the Iranian export if they are not British and French companies, which means consumers can still go to other oil companies that have minimal increase in prices. Of course when we trace the problem to its beginning, it all goes back to the sanctions. However since Iran is one of the major oil producers in the Middle East, their cut offs in exports can significantly affect the overall oil supplies and prices.