Oil embargo on Iran will drive up prices

February 14, 2012 11:31 am


A photo of an oil rig/FILE
TEHRAN, Feb 14 – US and EU sanctions on Iran’s oil exports will drive up oil prices globally because no viable alternative exists for the Islamic republic’s output, Iran’s envoy to OPEC was quoted as saying by the Mehr news agency on Tuesday.

“If there were an assured substitute for a big oil exporter then the sanctions would not send a price shock to the market…. (But) conditions in different nations show that, in present circumstances, a substitute does not exist,” Mohammad Ali Khatibi said.

He predicted that “oil prices will continue to rise in the market” because of colder than usual winter weather in America and Europe, and unrest in Sudan, Syria and Nigeria impacting their oil exports.

“Geopolitical tensions in the Middle East and the Persian Gulf,” were also behind rising oil prices, he stressed.

Oil prices on Tuesday slipped slightly, to $100.52 a barrel for light sweet Texas crude and $117.20 a barrel for Brent crude, on worsening economic outlooks for several European countries. But they remained supported generally by the ongoing tensions over Iran.

Khatibi’s comments followed assurances by Saudi Arabia that it could step in to pump more oil to make up for the 2.5 million barrels a day Iran exports, should Western sanctions make it necessary.

Iran has warned Saudi Arabia and other Gulf Arab states that it would view such intervention as “unfriendly”.

Khatibi himself said last month that, if Iran’s neighbours compensate in such a fashion, “they will be held responsible for what happens.”

The European Union has declared a ban on Iranian oil imports that is being phased in through to July. The United States has imposed sanctions which expose any foreign company that does business with Iran’s oil sector to US reprisals.

Thus far, two of Iran’s most important oil customers, China and India, have refused to go along with the US sanctions, though Beijing has been holding energy supply talks with Saudi Arabia.


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