Iran’s dispute with Europe appears to be escalating. Iran’s semi-official Mehrs news agency reports that Tehran has cut oil deliveries to Spain.

The move seems designed to inflict maximum damage on Europe at a time when many European economies are struggling under the weight of recession and debt repayment. Press tv reports: “Tehran has cut oil supply to Spain after stopping crude export to Greece as part of its countersanctions, unnamed sources confirmed on Tuesday. Tehran also mulls cutting oil supply to Germany and Italy.”

Greece, Spain and Italy are three nations at the heart of Europe’s financial crisis. Greece is already dependent on bailouts, while Spain and Italy may soon need bailouts of their own. Cutting their cheapest source of oil will only exacerbate their economic problems.

Germany, however, is the main driver behind Europe’s confrontation with Iran. In fact, the European Union, which is dominated by Germany, had already decided to impose a boycott on Iranian oil—Iran just beat it to the punch. Reuters reports that Spain and Italy are scrambling to find alternative sources of oil.

Iranian President Mahmoud Ahmadinejad reassured his country yesterday that Iran has enough funds to easily withstand a total oil embargo for two to three years. The European sanctions will be ineffective, he says.

As ZeroHedge’s Tyler Durden asks, “Just how much more Iranian crude are China and India importing despite promises to the contrary, and open warnings from the U.S. not to do so?”

Even though the United States has led the fight against Iran’s nuclear ambitions, it is increasingly Europe that is feeling the brunt of Iranian retaliation. Iran is an important oil supplier to Europe, but the U.S. does not import Iranian oil and is therefore not directly impacted by Iran’s oil boycott. Similarly, since many American companies stopped directly dealing with Iran years ago, it is European businesses and banks that are being affected by sanctions on Iran today.

A massive confrontation between Europe and Iran is growing more likely by the day. To understand why Iran’s aggressive posture toward Europe will inevitably lead to war, read The King of the South by Gerald Flurry.