Higher prices concern to rise due to Iranian pre-emptive action to sanctions
Azerbaijan, Baku, Dec. 7 /Trend, A.Badalova/
Pre-emptive action by Iran to suspend oil supplies from the market would elevate concerns of higher prices, analysts at the major U.S. investment bank JP Morgan believe.
In a weekly oil market report analysts mention that the tighter sanctions become, the greater the potential for Iran to become the first-mover - halting exports ahead of the imposition of tighter sanctions.
The European Union Energy Commissioner Guenther Oettinger signaled that the consensus within Europe has been reached for the ban oil imports from Iran. However, he didn't specify when the EU would implement a ban.
The EU agreed to tighten sanctions on Iran at a Dec. 1 meeting in Brussels, blacklisting certain individuals and companies.
During the World Petroleum Congress Oettinger said Europe should agree on the ban and then bring in other countries such as Russia and the U.S. He said the ministers at the commission think a ban is a good offer to other countries to go to a global ban.
JP Morgan's analysts believe that the political process on the sanctions will take time, but if Iran sees a loss of income as inevitable, there is a greater risk that it takes what limited political and economic capital it has to the negotiating table by invoking a pre-emptive export ban.
"This would undoubtedly shock the oil market, and while we are confident that it would trigger the rapid use of strategic reserves, the initial market shock could be in the $20 to $30/bbl range," analysts said.
Earlier Iranian Foreign Ministry stated that if sanctions were imposed on Iran's oil exports, the global price of crude would increase above $250 a barrel.
On Wednesday Reuters reported referring to the OPEC Secretary General Abdalla Salem El-Badri, that oil shortage in the international market will fail to be filled, in case of embargo on Iranian "black gold". He also expressed the hope that the EU will not impose an embargo on Iranian oil exports.
According to the U.S. Energy Information Administration (EIA) as of January 2011, Iran has an estimated 137 billion barrels of proven oil reserves, 9.3 percent of the world's total reserves and over 12 percent of OPEC reserves.
In 2010, Iran exported approximately 2.2 million bbl/d of crude oil. Last year Iran's net oil export revenues amounted to approximately $73 billion.
According to the EIA stats based for January-June of 2011, Iran exported 450,000 b/d to Europe Union, 341,000 to Japan, 328,000 to India, 244,000 to South Korea, 182,000 to Turkey and 543,000 to China.