Azerbaijan, Baku, Jan. 6 / Trend S. Isayev /
The recent EU sanctions put many oil companies in uneasy situation, who try to keep the balance between Washington's conditions and keeping their foot in the door in Iran - second largest exporter in the Organization of Petroleum Exporting Countries. Still the final determination will depend of a step that EU foreign ministers may take as soon as Jan. 30.
The EU indeed has other countries to ensure secure energy supplies to Europe and European Union's economic adviser Mehrdad Emadi-Moghadam believes Saudi Arabia can substitute Iran in this regrad. He sees Azerbaijan in this list, but with less probability.
"Saudi Arabia is by far considered the key substitute for Iran in terms of oil supply," Emadi-Moghadam told Trend over the telephone. Another country that could possibly be used as oil provider is Azerbaijan."
"Azerbaijan, right now, is on the list of countries that can become substitutes for Iran, but still it is also a matter of type, volume and quality of oil," he added.
Iran's crude oil is generally medium in sulfur content and in the 28 degree to 35 degree API range. Iran produces almost prospectively heavy and light crude.
Some European refineries, which are mainly refining crude 28 degree to 35 degree API range, will certainly face difficulty to modify to higher suplfur content oil. So, Saudi Arabia with its around 2 million barrels per day of super heavy surplus crude production capacity could replace Iranian crude after definite modifications at the European refineries.
Azerbaijan supplies European countries both light and mixed crude [Urals] and has not surplus crude production capacity.
According to Saudi Arabian Petroleum Minister Ali Al-Naimi, the country's oil production amounts to 12.5 mln bpd. The country increased its production rate in November to offset the shortage on the oil market.
Meanwhile, Iran warned that in case Western threats of imposing an oil embargo on the Islamic Republic take effect, it reserves the right to respond by choking the oil flow through the Strait of Hormuz, arguing that the free flow of oil must be for all or for none.
The possible closure of the waterway would have serious consequences for the world economy as it would greatly reduce crude oil, petroleum and liquefied natural gas supplies.
Oil accounts for more than 60 percent of the Iranian government's revenue, and starving Iran of that money has been the chief U.S. strategy in persuading the country to abandon a nuclear program that the U.S. fears is intended to produce nuclear weapons.
The EU officials reached a tentative agreement on Wednesday to begin barring Iranian oil purchases. Details of that agreement must be developed ahead of the Jan. 30 foreign ministers' meeting, which will formally consider the proposal.
"This is a key concern for EU right now, as many countries, including Greece, Spain and Italy, depend heavily on Iranian oil supplies," Emadi-Moghadam noted. "Decisions to find a reliable substitute is not something that can be expected to happen quickly."
"We can expect some results in three months or so," he added.