Juan Cole says sanctions wouldn't work:
You may have noticed that just last week, and despite Iran's political crisis, Russia and Iran conducted joint naval exercises in the Caspian Sea. You really think Russia is going to vote at the UN for crippling sanctions on Iran? What would happen to the value of Russian (and Chinese) investments in Iran?
Even a US ally such as the UK, which is seeing depletion of the North Sea fields, is increasingly interested in Iran as a source of natural gas. In part, this interest derives from a desire to avoid being hostage to Russia. Draconian sanctions on Iran would have the effect of actually strengthening Russia's near-monopoly position with regard to supplying natural gas to Western Europe.
Moreover, the Iranians can play spoiler for the US withdrawal from Iraq, both in the Shiite south and in Kurdistan. They helped rein in Muqtada al-Sadr, they can unleash the special groups of the Mahdi Army. As the US military draws down over the next year, it becomes more and more vulnerable in Iraq. Moreover, Iran has plenty of clients in Afghanistan and can make lots of trouble for US and NATO troops there. Obama could go into the 2012 election season with two quagmires on his hands if he provokes Iran too much.
And, Shiite-dominated Iraq would not go along with a gasoline embargo on Iran. In fact, Iraqis would line up to smuggle gasoline into their neighbor, both on economic and ideological grounds. And Venezuela among other potential exporters would not cooperate. Since gasoline is easily transported and transformed into cash (what the economists call 'fungible'), a gasoline embargo would be among the more difficult policies to implement that you could imagine, especially if much of the world is against it.