Business | Oil & Gas
World cannot afford to lose Iran oil: EIA
A disruption in Iran's crude oil exports because of a dispute over that country's nuclear program would further crimp the already tight global oil market and lead to higher petroleum prices
- Reuters
- Published: 23:32 May 3, 2009
Washington, Tehran: A disruption in Iran's crude oil exports because of a dispute over that country's nuclear program would further crimp the already tight global oil market and lead to higher petroleum prices, the head of the US Energy Information Administration warned.
"The market is so tightly balanced, clearly, we can't afford to lose a large supply of crude to the market," EIA chief Guy Caruso told Reuters in an interview.
Though the United States does not directly import Iranian crude, Caruso said a cutoff of Iran's oil would affect the US market because other countries that buy Iranian crude would compete with America to find new supplies.
"It's a fungible world oil market, and any disruption in supply affects everyone, because the price would go up for everyone," he said.
Caruso declined to say whether he believed a disruption of Iran's oil exports could send oil prices to $100 a barrel.
"I wouldn't want to speculate on that. Hopefully (the dispute) would be resolved without any disruption of supply," he said.
The United States and European Union want the United Nations Security Council to consider action against Iran to prevent, or punish, that country for moving forward with an uranium enrichment program that the West fears could lead the development of a nuclear bomb.
Iran says its uranium programme is intended to produce fuel to run nuclear power plants and boost electricity supplies.
Economic sanctions, which could affect Iran's oil exports, are possible but thought to be unlikely.
Iran, the world's fourth biggest oil exporter, has warned that global crude prices would go higher if the UN imposes sanctions.
Meanwhile, Iran has reached "preliminary agreements" on exports of gas to Japan, Spain, France and the UK despite the threat of sanctions, Iran's oil ministry news agency reported, citing an official.
"We hope to reach final agreements with them," Roknoddin Javadi, the managing director of the National Iranian Gas Exports Company, said on the Petroenergy Information Network late yesterday. "Preliminary talks" have also started with Italy and Germany.
Japanese companies, which Petroenergy didn't identify, are interested in importing one to 2.5 million metric tonnes of LNG, Javadi said. European companies are seeking another 8 to 9 million metric tonnes.
Gas deliveries to Europe were interrupted on January 1 after Gazprom choked supplies to Ukraine in a dispute over prices.
NIOC unlikely to cut exports over dispute
Iran is unlikely to curtail its crude oil exports in response to pressure from the United States and the European Union over Iran's nuclear programme, a top Omani government official said.
"I personally think the oil countries need the oil markets to sell their oil, and the markets need the oil countries to buy the oil from. This is how the world moves," Omani commerce and industry minister Makboul bin Ali bin Sultan said. "That's why peaceful solutions are always the best solutions."
Some oil industry analysts see a possibility that Iran, which amassed some $40 billion in oil export revenue last year, could afford to withdraw oil deliberately from the world market.
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