In hindsight, the real indicator that the bubble was going to burst, was the price of oil.

We remember the days when the United States went to war in Iraq and we had pointed out in a leading article that we would not be surprised if the price of oil were to double one day.

Oil was going at about $60 per barrel at the time, and then, just before the big crash, we saw prices of $120 and more. It was clear, something had to give. And give it did, with the United States and Europe almost going under due to massive deficits and debts. It was all there on the wall, but thankfully (in a sense) we did get the heads up when Greece admitted that its books had been cooked and that the country was in dire straits.

Since then, oil has fallen to more reasonable prices – something in the region of $100 per barrel. But now, there are storm clouds on the horizon. Iran has announced that it will cut the supply to European Union nations in retaliation to an EU embargo. The state oil company said that prices might reach $120 to $150 per barrel and that Iran would expand its capacity to refine crude domestically.

When one factors in the Libya situation, where oil is not being pumped out in any meaningful quantities, similarly to Iraq, then a shortage could be on the cards, and this is where OPEC (the oil producing nations) comes in.

OPEC must agree to increase its output, if Iran does pull the plug on Europe. Failure to do so would see prices skyrocket, possibly even up to the levels being predicted by Iran. This would hurt OPEC (of which Iran is a member and the second largest producer) in the long run.

And Iran is not pulling any punches. In fact, Iranian lawmakers and officials have called for an immediate ban on oil exports to the European bloc before the EU’s ban fully goes into effect in July. They say this will hurt Europe before we can find alternative suppliers.

While this is all bad news, and Iran does not look like it is going to stop its nuclear programme anytime soon, it could spur Europe into looking at alternative fuels.

It is also quite ironic to note that the EU needs Iran’s oil for power, while Iran is risking its trade with Europe in order to pursue its own goals of power – nuclear power. As ever, the world gets more and more complex.