 |
|
|
The European Union’s ban on imports of Iranian crude will drive up oil prices and aggravate market instability, the Islamic Republic said in comments that were contradicted by some analysts.
The decision by EU foreign ministers to phase out purchases of Iranian oil from July was “hasty” and may lead to “heavy economic loss and damages to the crisis-stricken people of Europe,” the Iranian oil ministry said in a statement on state-run Fars news agency late on Monday.
Iran’s foreign ministry said the decision “would bear bitter fruit.”
The EU ban is part of efforts by the bloc and the US to pressure Iran over a nuclear programme that Western nations say is aimed at producing weapons. Iran says the programme is for civilian energy and medical purposes. The EU measures include freezing assets of the Iranian central bank in Europe and banning trade in petrochemicals from Iran.
“They were rattled by the EU actions and their ability to reach a clear consensus, so these statements seem like more bluster to reassure a domestic audience,” Robin Mills, an analyst at Manaar Energy Consulting in Dubai, said yesterday.
Crude gained since the middle of last month, partly because of concern that Iran may close the Strait of Hormuz, the passage for about 20% of the world’s oil. The risk of disruption is already included in prices, adding $10 a barrel this month, said Ole Hansen, trading advisory manager at Saxo Bank.
The Iranian ministry’s comments may point to an easing in tension between the West and Iran as the country may seek alternative customers before the EU embargo comes into effect, said Mills, who worked on Iran for a decade with Royal Dutch Shell.
“If they are able to find buyers without having to offer too much in the way of discounts, they won’t have much of a problem with the embargo come June,” Mills said by telephone.
Increased output from members of the Organisation of Petroleum Exporting Countries such as Libya may make up for a decline in Iranian crude supply, Oswald Clint, an analyst at Sanford C. Bernstein & Co, said in a note yesterday. Brent crude may trade from $100 to $120 a barrel if other producers make up any fall in Iran’s exports, according to Bernstein.
“The Iranian nation has many times proved that it would never yield to pressure and unjust moves, aimed at abandoning its legitimate and legal rights,” the foreign ministry said in its statement. “Any confrontation move against the independence and advancement of the independent countries would lead to further complication of the present day world crises,” it said.
Iran has “no concerns whatsoever for finding new customers” for its crude, according to the oil ministry’s statement. Europe, collectively the second-biggest buyer of Iranian oil after China, imported 450,000 bpd of the nation’s crude in the first half of last year, US Energy Department data shows.