By Dmitry Zhdannikov
DAVOS, Switzerland Jan 27 (Reuters) – As the European
Union prepares to ban Iranian oil and the United States turns
the screw on payments, oil executives and policymakers say China
and Russia stand to gain the most and Western oil firms and
consumers may emerge the biggest losers.
Iran will continue to sell much the same volume of oil –
2.6 million barrels per day or around 3 percent of world supply
– but almost all of it will flow to China, they reason. And
being pretty much Iran’s only remaining customer, Beijing will
be able to negotiate a much reduced price.
The EU will ban Iranian oil from July. The United States
plans sanctions on Iran’s central bank and possibly its shipping
firm. European headquartered oil firms such as France’s Total
and Royal Dutch Shell have already abandoned
Iranian oil purchases or are in the process of doing so.
Japan and South Korea have signalled they may reduce
purchases of Iranian oil to comply with U.S. sanctions designed
to put pressure on Tehran over its nuclear programme.
That leaves a growing number of buyers competing for
alternative supplies. Inevitably attention has turned to Saudi
Arabia, the world’s biggest exporter and the only country that
can quickly increase oil output and help the West avoid a price
spike that would deal a severe economic blow.
The IMF said this week that crude oil prices could rise 20
to 30 percent if Iran were to retaliate by halting its oil
exports altogether. Oil industry executives meeting in Davos
said energy markets can afford to lose half of Iran’s 2.6
million barrels per day. That would be roughly equivalent to
supplies lost during Libya’s civil war in 2011. They are
confident Saudi Arabia will fill the gap.
“What we say is that oil is fungible. Iranian oil will still
find its way into the market, to Asian markets, China and
possibly at a lower price,” a top Saudi source told Reuters,
speaking on condition of anonymity because of the sensitivity of
the matter.
“But if let’s say 50 percent of Iranian oil is lost, we have
spare capacity, we have the capacity to replace it as Libya has
shown,” he added.
Continued…
