Int'l experts: World prices for lubricants not suffer from sanctions against Iran

Int'l experts: World prices for lubricants not suffer from sanctions against Iran

Azerbaijan, Baku, July 7 / Trend A. Badalova /

One of the most severe consequences of tightening sanctions against Iran, targeting its nuclear program, is the suspension of petrol supply by the largest companies to the country. The result of such actions may be serious for Iran. The country can face a big shortage of fuel.

French company Total ceased supply of petrol to Iran at the end of last month. It became the largest supplier of fuel in the country this year. It had a 25 percent share on the Iranian market.

This decision was followed immediately after the approval of a new law by the U.S. Congress allowing President Obama to punish companies that supply petrol and other petroleum products to Iran.

The companies that have suspended shipments of petrol to Iran, also include the British-Dutch RD / Shell, the Spanish Repsol, Dutch Vitol, Malaysia's Petronas.

Today, Iran does not have enough processing capacity to meet its domestic needs for petrol. The country is forced to import up to 40 percent of the total domestic demand for fuel and lubricants.

According to the Energy Information Administration (EIA), Iran's petrol import totaled about 130,000 barrels per day in 2009, representing about 80 percent of the total volume of imported products.

According to Western analysts, despite the shortage of petrol in the country, owing to the refusal of many companies to supply gas to Iran, fuel prices in the country wil not increase.

The refusal by some suppliers to deliver gasoline to Iran will probably drive up the price Iran must pay for that gasoline, U.S analytical company Energy Security Analysis (ESAI) analyst Andrew Reed said.

"I do not think this will affect retail gasoline prices in Iran though since gasoline is subsidized," Reed told Trend via e-mail.

The sanctions will not impact global gasoline prices, he said.

Today, petrol prices in Iran are restrained by granting state subsidies. Petrol in the country is sold on a card system, which provides for the implementation of limited amounts of fuel at discounted prices.

One of the recent "attacks" on Iran was the ban on flights of two-thirds of Iran Air airliners in the EU airspace imposed by the European Aviation Safety Committee on this week.

Earlier this week, the Iranian side accused three countries - Great Britain, Germany and the UAE of refusing from refueling passenger airliners from Iran.

Guy Caruso, a senior advisor, energy and national security program at Center for Strategic and International Studies does not expect significant consequences for the price for aviation kerosene, as well as its demand as a result of the ban.

"I think it is safe to say that the EU ban on Iran Air will a little or no effect on jet fuel demand and prices, Guy Caruso said.

On Tuesday, July 6 spot price for jet fuel Rotterdam (ARA) amounted to $658.5 per ton.

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