Iran Predicts Higher Global Oil Prices over 'Political Pressure'

World | September 3, 2012, Monday // 12:24|  views

Iranian Oil Minister Rostam Qasemi speaks at a press conference in Tehran, Iran, 04 February 2012. EPA/BGNES

The current embargo on Iranian oil and political pressure on the Islamic Republic will result in higher oil prices on international markets, Iranian Petroleum Minister Rostam Qasemi said.

"If [oil] producing countries are confronted with difficulties and restrictions, the market will react to the situation accordingly, which will cause an increase in prices," he told RIA Novosti on Monday, his first interview with a foreign news agency.

Iranian oil exports have fallen by an estimated 40% since the EU introduced an oil embargo against Tehran in July.

According to Iran's Petroleum Ministry, the Islamic Republic currently produces 4 million barrels of crude per day, half of which is exported.

The price for October futures on U.S. Light Sweet Crude Oil dropped 16 cents as of GMT 04:40, or to USD 96.31 per barrel. The price for October futures on Brent dropped 19 cents to USD 114.38 per barrel.

Iran is to spend 18 percent of its stabilization fund for the development of the oil and gas sector, Petroleum Minister Rostam Qasemi said further.

"This year [2012-2013] we are planning to use USD 4 B for the development of the oil and gas industry from the stabilization fund alone," he added.

Iranian oil exports have fallen by an estimated 40 percent since the EU introduced an oil embargo against Tehran in July.

The National Development Fund [National Stabilization Fund] was established to protect the national economy and reduce Iran's dependence on oil, Qasemi said.

"Every year 20 percent of the country's GDP goes to the stabilization fund," he said.

Iran also has other foreign exchange reserves both at home and abroad, he added.

"So there will be no particular difficulties this year with financing the country's oil and gas industry," he said. As of 2010, Iran's stabilization fund was USD 40 B.

Qasemi further announced Tehran is conducting negotiations with Russian companies about cooperation in the oil and gas sector.

There are no immediate plans for joint projects in the country, however, he added.

"We would be happy if Russia...expresses readiness for cooperation in the oil and gas sector," he said. "We hope to achieve a positive result."

Russian companies have been wary of cooperation with Iran, fearing sanctions on Western markets.

"We [would] welcome cooperation with Russian companies if they are ready to invest in Iran's oil and gas sector and develop oil and gas deposits," he said. "However, at present we do not have any joint projects."

The United States, Israel and a number of Western European countries suspect Iran of running a nuclear weapons program under the guise of a civil nuclear project. Iran denies this and maintains its nuclear ambitions are purely peaceful. Iran is the subject of a raft of sanctions by the U.S. and the European Union.

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Tags: Rostam Qasemi, oil production, oil prices, oil, Iranian nuclear program, Iran, Russia


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