Iran says won't stop oil exports, but doubts remain



By Zoltan Simon
AFP
VIENNA
Petroleumworld.com 03 09 06

The Iranian oil minister gave assurances Wednesday his country would continue to export crude even if hit by sanctions because of its nuclear programme, but another senior Iranian official warned that the policy could be "reviewed."

Oil Minister Kazem Vaziri-Hamaneh was speaking after the OPEC cartel, of which Iran is a key member, had decided to keep its official crude output quota unchanged at 28.0 million barrels.

The decision came in response to high oil prices seen as reflecting market concern over possible supply disruption in Iran and unrest in Nigeria.

Vaziri-Hamaneh said UN economic sanctions against Iran could send oil prices, already trading above 60.0 dollars per barrel, even higher but would not affect the decision of Iran to maintain oil supplies.

"(Economic sanctions) could affect the (oil) market and prices could go up but it will not affect our decision to continue our supply," Vaziri-Hamaneh told reporters.

"Oil flow is continuing. The exports will not be stopped," he said.

But top Iranian security official Javad Vaidi, who headed his country's delegation to the UN International Atomic Energy Agency at a meeting here this week, was more ambiguous.

"We will not use the oil weapon now because we don't want to confront other countries," Vaidi told AFP on the sidelines of the meeting, which heard a report on Iran's nuclear activities.

"But if the situation changes, we will have to review our politics and adopt our policy," he added.

While Tehran insists its nuclear programme is for civilan energy use, there are fears in the United States and the European Union that it could have military applications as well.

US ambassador Gregory Schulte, speaking here Wednesday after the IAEA completed its review, said a report on Iran's nuclear activities would now be sent to the United Nations Security Council, a step that could open the door to sanctions on Tehran.

In Washington, US Under Secretary of State Nicholas Burns said the Iranian nuclear question would be brought before the Security Council next week.

Despite some Iranian reassurances over crude supply, analysts said tensions over Tehran's nuclear programme remained the main reason behind high oil prices.

The meeting of the Organization of the Petroleum Exporting Countries, which produces 40.0 percent of world crude, took place amid market concern that Iran might slash its oil exports if hit with sanctions.

"The supply disruption premium has overwhelmed fundamental physical supply in the marketplace as issue number one," said Jason Schenker, an oil market analyst with Wachovia.

"You could still see some downward price moves if the Iranian situation just fades from view. If it fades from the headlines you could see oil prices move down several dollars," Schenker said.

Schenker said oil disruption in Nigeria, where attacks by miliants on oil installations has forced a 20.0-percent cut in production, was also affecting prices.

After the OPEC decision to maintain output, a barrel of New York's light sweet crude for delivery in April eased by 44 cents to 61.14 dollars.

In London, the price of Brent North Sea crude for April deliverty slid 37 cents to 60.80 dollars.

Iran is OPEC's second biggest producer with crude output of 4.110 million barrels per day (bpd), according to the official cartel quota that entered into force on July 1, 2005.

OPEC is actually producing more than 29.0 million barrels of crude per day including output from Iraq, which is not included in the official quota.

OPEC, which is headquartered in Vienna, comprises Saudi Arabia, Iran, Venezuela, Kuwait, the United Arab Emirates, Iraq, Nigeria, Libya, Indonesia, Algeria and Qatar.

AFP 03 07 06

Copyright © 2006 AFP. All rights reserved

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