Any decision by Iran to cut oil exports to the European Union will affect the price of oil and hurt the region’s economy, OPEC Secretary General Abdalla Salem El-Badri told media reporters on Monday.
Iran’s parliament is to debate a “double-urgency bill” which would halt all oil exports to the EU in response to sanctions by the bloc, which plans to ban imports of oil from the Middle Eastern country in July.
“Iran are exporting 400-500,000 barrels a day to the EU,” El-Badri said. “Of course this quantity is going to affect the EU…you don’t want to add more problems to the EU. And for the Iranians also, to cut 400-500,000 barrels a day from their exports, it will affect their living.”
El-Bardi did not want to speculate on whether Iran will go ahead with the move to ban exports to the EU, which would disturb a five-month transitional period to allow the countries to find alternative suppliers.
“Today…the market is stable, there is no shortage of oil anywhere in the world,” he said. “However, to take out 400-500,000 barrels a day in a matter of days, this will affect the price. Of course the price will go up. I don’t know how much.”
He reiterated his statement that $100 per barrel was a sustainable price for oil for this year.
“One hundred dollars is suitable for producers and consumers,” El-Badri said. “For us, we can invest, we can have enough income for our member countries and also the consumers can survive, can have their economy flourish with $100. I think anything above $110 is a problem.”
El-Badri added that he hoped that Iran will not close the Strait of Hormuz– a shipping lane bottleneck that sees some 17 million barrels per day of crude oil pass through, or close to 20 percent of global demand.
“I don’t want to think about [the possibility of the Strait’s closure] because of the huge quantity that is passing through that gate,” the OPEC secretary general said, adding that he hoped that “a peaceful solution will prevail” because “that area had its share of trouble and problems over many years.”
Libyan oil is coming back on stream after the popular revolt that toppled former leader Muammar Gaddafi and left him dead.
El-Badri said Libya is likely to produce 1.6 million barrels a day by the end of June from 1.3 million barrels a day currently.
Demand for oil is weakening because of the protracted debt crisis in the euro zone, he said. OPEC had forecast that demand would grow by 1.1 million barrels a day this year.
“But when I see the EU debt crisis, it’s a problem, if not solved it will affect…almost everybody. The world growth will be less, there is no decoupling at this time,” he said.
A further threat on demand came from emerging markets, themselves affected by the debt crisis in the euro zone and by their own domestic problems.
“China are trying to put the brakes on their economy because it’s overheated. China is the main driver of our demand,” El-Badri said.
