Qasemi Says Sanctions Will Change Oil Market, Criticizes Saudi Policy

Iran’s Petroleum Minister Rostam Qasemi told delegates at the 17th Oil, Gas, Petrochemical and Refining Exhibition in Tehran on 18 April that the international embargo imposed on Iranian crude exports has not inhibited Iran from selling its oil. He claimed that “Iran faces no restrictions in the world’s markets,” adding that as a result of these sanctions, “crude prices jumped nearly 20%. If the same trend goes on, the oil market would change drastically.” Mr Qasemi also noted that Iran managed to invest $30bn in its oil and gas industry last year and expressed his hope that Tehran “would raise this figure to more than $40bn.” He also said that last year Iran earned $60bn from oil exports.

Mr Qasemi also criticized Saudi Arabia’s policy, saying it contradicted the assurances Riyadh gave during the last OPEC meeting that it “was not seeking to take Iran’s share of the oil market.” In reality, the Iranian minister said, “the latest policy of Saudi Arabia turned out otherwise.” However, he played down the impact of Saudi policy, claiming that “Saudi Arabia is producing oil at its maximum capacity and any further production cannot last for a long time… Saudi production may be temporary, and it definitely cannot continue [at this rate].” Mr Qasemi said that the failure of international sanctions could also be demonstrated by the fact that Iran has not asked for a lowering of its OPEC production quota. However, there were reports last week that Iran was storing up to 16mn barrels of crude oil offshore in tankers. While this was attributed to the loss of regular customers because of sanctions, Iran has built up large volumes of crude in moored tankers in the past when it has not been satisfied with prices offered, particularly for its heavy, sour crudes.

Mr Qasemi’s assessment of the impact of sanctions was in contrast to that of international observers. For example, on 10 April the US Energy Information Administration projected a 500,00 b/d decrease in Iranian production by the end of 2012 adding that the country’s output could also be curtailed by a further 200,000 b/d in 2013. “Iran’s decline in output began to accelerate during the last quarter of 2011 and has continued,” the EIA said, attributing the fall to a shortage of investment “which is needed to offset natural production declines.”

Turkey Complains Of Impact Of Sanctions

Turkey’s Economy Minister Zafer Caglayan told reporters in Washington on 18 April that Turkish exports to Iran have decreased by a margin of 20% since the beginning of the year as a consequence of the sanctions regime. He said that the economic impact of the sanctions “is borne by Turkey, not just by Iran,” noting that as a result of the pressure against Tehran, Turkey had to pay 40% more for its oil and gas imports, which in 2011 cost $54bn. Turkey’s Minister of Energy Taner Yildiz told Press TV on 13 April that “Iran is the one of the main suppliers of crude oil to Turkey. Last year, Turkey imported over 50% of its crude oil from Iran,” adding that this year, “this figure will be less than 40%”. On 30 March Mr Yildiz announced that Turkey will comply with the US demand to curtail oil import dependence on Iran, noting that Ankara has already “begun importing crude oil from Libya” and would “accordingly diminish its imports from Iran” by up to 20% (MEES, 9 April).

© Copyright MEES 2012.