World has enough oil to cover fall in Iran imports



Reuters

Published — Friday 8 June 2012

Last update 8 June 2012 4:14 am

| نسخة PDF Print News | A A

KUALA LUMPUR: The world has enough oil supply to cover any fall in crude exports from Iran ahead of Western sanctions that will start later this month, Algerian Oil Minister Youcef Yousfi said.
Yousfi’s comments about fellow OPEC member Iran come ahead a meeting of the producer group next week, and as other members of the cartel step up production to cover for a potential shortfall in Iranian crude exports.
“Yes, there is enough oil in the market,” the minister said when asked whether there is enough crude to offset the impact of Western sanctions on Iranian exports.
Saudi Arabia has boosted output to the highest level in decades, with total OPEC oil output in May at its highest since 2008.
Benchmark Brent crude traded just above $100 yesterday, down from a high of over $128 in March, making alternatives cheaper for Iran’s big oil buyers in Asia and elsewhere.
Yousfi also said Algeria plans to boost liquefied natural gas exports to 40 billion cubic meters (bcm) in two to three years, up from 27 bcm currently.
The country is building two new LNG plants with a total capacity of 11-12 million tons per year (tpy) which will start operating in the next 1-2 years, he said.
Also yesterday, energy industry expert Daniel Yergin said rising global crude supplies and falling prices will cushion the impact on the global economy of Western sanctions aimed at curbing Iran’s nuclear program.
“This is a very powerful flotilla of sanctions that are heading toward Iran, it’s never been this powerful,” Daniel Yergin, IHS CERA chairman and author of the pullitzer winning work “The Prize,” said.
“What makes a big difference is that there is alternative oil in the market. There is a very concerted effort to ensure that alternative supply that will come into the market to enable the sanctions to work.”
More supply was also coming from Iraq as international oil companies develop giant fields there and from Libya as the country recovers from civil war, he added.
Output from tight oilfields in the United States had also increased supply in the world’s top consumer by 600,000 bpd to 700,000 bpd, he said, cutting import needs. Inventories in the US recently hit their highest level since 1990.
Asian buyers of Iranian crude are running out of time to find ways around Western sanctions that aim to reduce oil revenues for the Islamic Republic. Iran exports most of its crude to China, Japan, India and South Korea, who have already cut purchases by about a fifth from the 1.45 million barrels per day they were buying a year ago.
Imports will fall even more if they fail to find a way around the biggest headache — an EU ban on insuring shipments of Iran’s oil. Still, lower oil prices will undermine the argument among consumers that the loss of Iranian crude could harm economic growth.
“Prices have come down and that really takes pressure off the economies and it’s helpful to economic growth and recovery,” Yergin said.
The sanctions have pushed Iran to open talks with the West on its nuclear program.
“This is really a very large chess game that’s been played out and Iran will have to decide, is there some point that they are willing to make a deal that will be satisfactory to the Western European countries and the United States on its nuclear program?” Yergin said.
Iran’s crude stockpile is on the rise as exports drop, Yergin said.
“We know that some of it is going into storage — several hundred thousand barrels a day,” Yergin said.
Iran will be looking to sell its oil at steep discounts as the sanctions eat away at exports, he added.
Any resolution between the West and Iran over its nuclear program would depress oil prices as Iran sells stored oil, force other producers to reduce output, he said.

What's happening around Saudi Arabia

RIYADH: A Border Guard soldier died on Saturday in a missile attack from across the Yemeni border in Dhahran Al-Jonoub in Asir.The man, identified as Pvt. Abdulilah Abdullah Hamoud Al-Shahrani, was patrolling the border in the area when the attack to...
RIYADH: Custodian of Two Holy Mosques King Salman takes pride in his religion and his country, according to Prince Sultan bin Salman, Saudi Commission for Tourism and National Heritage (SCTH) chairman.“King Salman lives his life in a confident and re...
RIYADH: Justice Minister Walid Al-Samaani and Khaled Al-Muhaisin, the president of the National Anti-Corruption Commission (Nazaha), are scheduled to meet soon to clear resolve differences between Nazaha and Supreme Judicial Council (SJC). According...
JEDDAH: Starbucks has clarified that the ban on women’s entry at one of its Riyadh stores is only temporary and that the coffee shop will be opened to them soon after a separation wall is erected.Starbucks reportedly said that members of the Committe...
RIYADH: The Saudi government is strongly supporting the development of organic farming and institutional capacity building as part of an ambitious plan to expand the Kingdom’s shift toward organic agriculture, which will be good for the country’s nut...
RIYADH: An attempt to smuggle in 2.4 million amphetamine pills was foiled along the coast of Tabuk.An Interior Ministry spokesman said the traffickers fled from the coast after they were chased by Border Guard patrols.The spokesman said a suspect boa...
RIYADH: King Saud University (KSU) closed the booths of five companies which participated in the recently concluded five-day Career Week because of lack of interest in employing applicants.Career Week, held under the auspices of Custodian of Two Holy...
RIYADH: The Kingdom has been developing Oroug Bani Maradh as a protected area for eco-tourism in the heart of the Empty Quarter.Aside from a number of live flora and fauna, there’s are non-domesticated animal species in the wildlife sanctuary located...
JEDDAH: Two women and three children, including an infant, lost their lives in separate fire incidents on Friday.A woman and two children died when their tent caught fire at Al-Issawi, 35 km into the desert, on Friday. The operations room of Civil De...
RIYADH: Arrangements are being made at the Ministry of Health to open a new portal for the Zika virus on its website.Faisal Al-Zahrani, the ministry spokesman, said that the new portal will give adequate details and updates about the virus which has...
ARAR: A Saudi father has urged his two sons to immediately surrender, after their names recently appeared on the list of suspects who participated in the terror attack on the Special Emergency Forces Mosque in Asir in August last year.Salem Yaslam Al...
JEDDAH: The Ministry of Education has called on schools to implement a national anti-drug plan and given a four-month period to implement the plan and report the results.Educational directorates, according to a recent circular, have issued a directiv...
NAJRAN: School of Dentistry students at Najran University expressed disappointment with group failure of 13 students, accusing the faculty members of being unfair with their examinations.The university spokesman, Dr. Zuhair Al-Omari, said the eighth...
JEDDAH: Pakistan and Kashmir expatriates observed Kashmir Solidarity Day at the residence of Pakistan Consul General Shehryar Akbar Khan on Friday.Abdul Aziz Al-Jiffry, professor at King Abdul Aziz University, was the chief guest.The event was meant...
RIYADH: The Sri Lankan government has urged its overseas workers to register with the Sri Lanka Bureau of Foreign Employment (SLBFE) before they leave abroad for employment.Foreign Employment Minister Thalatha Athukorale told the overseas workers tha...

Stay Connected

Facebook