Iran Could Stop Oil Exports If Sanctions Intensify
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Iran has said it would consider taking its oil off the market if international sanctions, aimed at forcing Tehran to abandon its nuclear enrichment programme, intensify. According to the nation’s oil minister, Iran has plans to survive without oil revenues.
The comments by Iran’s Oil Minister Rostam Qasemi were the latest in a series of threats of retaliation by Tehran in response to the sanctions, which have heightened political tensions across the Middle East.
Iran has said it would consider taking its oil off the market if international sanctions, aimed at forcing Tehran to abandon its nuclear enrichment programme, intensify. According to the nation’s oil minister, Iran has plans to survive without oil revenues.
The comments by Iran’s Oil Minister Rostam Qasemi were the latest in a series of threats of retaliation by Tehran in response to the sanctions, which have heightened political tensions across the Middle East.
Iran’s oil exports have dwindled in the face of US and EU sanctions on its energy and financial industries. The International Energy Agency, which advises the world’s biggest industrialized economies, reported that Iranian shipments slumped to 860,000 barrels a day in September from 1.1 million barrels in August.
“If sanctions intensify we will stop exporting oil,” Qasemi told reporters in Dubai.
“If you continue to add to the sanctions we (will) cut our oil exports to the world… We are hopeful that this doesn’t happen, because citizens will suffer. We don’t want to see European and U.S. citizens suffer,” he said, adding that the loss of Iranian oil on the market would drive up oil prices.
The United States and European Union have said more sanctions are looming.
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But the threat appeared to have no impact on markets yesterday. On the New York Mercantile Exchange, the price of the benchmark grade fell $1.98 a barrel or 2.3 percent to $86.67, the lowest closing price since July 12 – a reflection of how steeply Iran’s influence on the oil market has eroded.
A plunge in the Iranian rial against the dollar has also suggested that the sanctions are beginning to cripple the economy but Iran has responded by saying it would revert to a “Plan B” that would allow it to survive without oil revenues.
Explaining that a unilateral halt in Iran’s oil sales would be “extremely unlikely”, Robin Mills, a former Iran specialist at Royal Dutch Shell Plc told Bloomberg:
[quote] If you are talking about something like 800,000 barrels a day of exports, the oil market can live without it, but the Iranians cant. [/quote]
Oil sales generated half of Iran’s official revenues, and crude and refined products together accounted for almost 80 percent of the country’s total exports, according to a US Energy Department’s Energy Information Administration report last November.
Iran holds the world’s fourth-largest oil reserves and was once the second-biggest producer in the Organization of Petroleum Exporting Countries, behind Saudi Arabia.
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