Sunday, January 15, 2012

Record Oil Prices, Rising Tensions with Iran Top “Worry” Lists for 2012

OPEC reported that 2011 was a record-shattering year for oil prices, which averaged $107 a barrel, about 14 percent more than in the previous record year of 2008. The Washington Post, which carried the report in its Sunday’s edition, also quotes a leading investment strategist as saying that the rising oil prices and growing tensions with Iran are now on top of economists’ and policymakers’ worry lists for 2012.

“It’s been in the background for quite some time,” said Edward Yardeni, the investment strategist. “I’ve characterized it as one of the four horsemen of the apocalypse for 2012. Now it’s come from behind to be at the head of the pack,” he added [Washington Post, 15 January].

With new US and European sanctions expected to gradually reduce the export of Iranian oil in the next six months, the price of oil can go even higher, hurting the fragile global economy, especially Europe’s. Three of Europe’s most troubled economies — Greece, Spain and Italy — are also the E.U.’s biggest importers of Iranian crude and would be most affected by a new ban.

“At current prices, the world economy is going to grow at 3 percent to 3.5 percent this year,” said Adam Sieminski, chief energy economist at Deutsche Bank. “That’s not great, but okay. At $125 a barrel, it is only going to grow 2.5 percent, and that’s not very good. And at $150, we might only grow 1 percent, and that’s a disaster.” [Washington Post, 15 January].

In the next six months, the UAE will open a new overland pipeline bypassing the Strait of Hormuz, and the Libyan output would likely return to pre-conflict levels. Hence the EU is delaying and phasing out the ban on Iranian oil imports for the next six months to give European refiners who buy some 600,000 barrels of Iranian oil daily to source new supplies.

Iran’s greatest hope for rerouting its exports would be to sell more to its biggest customer, China, which imported about 550,000 barrels a day last year, the Post reports. But a contract dispute has led to a temporary decline in Iranian sales to China. And, as the Post observes, it isn’t clear how much China wants to rely on one source of oil or how much China can add to its strategic stockpiles.

The six-month delay in EU’s ban of Iran oil imports would also give Iran and the major Western powers yet another chance to resolve the issues over Iran’s nuclear program through talks. Avoiding a military conflict over the Iranian program will be key to secure stable oil prices in 2012, and indeed avoiding the disaster stated by Deutsche Bank’s Sieminski.


Anonymous said...

China Gets Cheaper Iran Oil as U.S. Pays for Hormuz Patrols

January 13, 2012, 1:42 PM EST

Iran exports about 2.5 million barrels of oil per day or about 900million barrels per year. China normally gets about 22% of it. If China is the only one buying. Then they get $90 billion worth of oil for $54 billion and save $36 billion.

If China is only getting half of the oil and a 20% discount they would get $25 million every day. If they get all of the oil and all of the discount, they will get $100million every day.

Anonymous said...

Iran OPEC gov. warns Arab oil producers

Sun Jan 15, 2012 11:26am GMT

TEHRAN, Jan 15 (Reuters) - Iran's Gulf Arab neighbours should not raise their production to replace Iranian oil if the European Union goes ahead with a ban on Iranian crude imports, Iran's OPEC governor said on Sunday.

The EU has agreed in principle to ban imports of Iranian oil, while the United States has pressured Asian buyers to reduce imports to starve Tehran of revenue for its disputed nuclear programme.

Asian leaders from some of Iran's biggest oil sales markets are already touring the Middle East to secure supplies, as tension over Iran's nuclear plans builds, while European buyers may rely more heavily on Arab oil producers should an EU ban come into effect.

Iran OPEC Governor Mohammad Ali Khatibi said Tehran would see any move to fill in for Iranian crude as Gulf Arab oil producers siding with Iran's western opponents.

"If the oil producing Gulf states give the green light to replacing Iran's oil these countries would be the main culprits for whatever happens in the region -- including the Strait of Hormuz," Khatibi told the Sharq daily newspaper.


Stranger said...

all this for one little corner of the earth occupied by bunch of racist elitists European colony known as Israel

Anonymous said...

Stranger you should become a Tripe salesman. Seriously ! :)

Anonymous said...

Iran has become the play thing of the Chinese and Russians to amuse themselves with.

Anonymous said...

What a joke the "mighty Islamic republic" can't even shift its oil anymore.And soon the Chinese will cut off their oil imports from Iran.
Then we shall see how "mighty" the Islamic terrorist fascist regime is.