Threats to Iran puts Gulf oil exports at risk

Around 40 percent of global oil shipments leave the Gulf through the Strait of Hormuz off Iran's southern coast and Tehran has threatened to impose controls on shipping there if it is attacked, and warned Gulf neighbors of reprisals if they took part.

 

An intensifying war of words between Iran and the West over Tehran's nuclear program helped push oil to a record over $147 a barrel on Friday.

 

"If there is a threat in our region this will not be just against our exports," Mohammad Ali Khatibi told Reuters in a telephone interview.

 

"It will affect other producers, not just Iran. I mean the oil exporters Iraq, Kuwait, Saudi Arabia, Qatar and the United Arab Emirates. Any problem from the United States or Israel to the region would be a threat to 40 percent of all the world's traded oil."

 

The United States has refused to rule out military action against Iran if Tehran continues with attempts to enrich uranium. Tehran says it wants to develop nuclear power, while Washington says Iran wants nuclear arms.

 

Israel staged an air force drill last month that sparked speculation about a possible assault on Iranian nuclear sites.

 

Tehran has vowed to strike back at Israel as well as U.S. interests and military bases and shipping if it came under attack.

 

President Mahmoud Ahmadinejad said on Sunday that even before its enemies "get their hands on the trigger" the country's military would cut them off, Iran's media reported.Â

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RHETORIC INFLATES PRICE

Bellicose rhetoric from oil consumers is pushing up the price of oil, rather than any problems with supplies, Khatibi said, adding that producers were pumping more oil than needed in global markets.

 

"This is not a time to build more tension in the region," he said.

 

"The oil market is very sensitive right now. Some consumers are sending the wrong signals to the market and pushing up the price."

 

The Organization of the Petroleum Exporting Countries (OPEC) had no need to boost oil supply when it meets in September as the group was already pumping around 1.2 million to 1.5 million barrels per day (bpd) above demand, Khatibi said.

 

If buyers want it, the world's largest oil exporter Saudi Arabia has offered more, he said.

 

"There is no need to increase output," he said. "There is no additional demand. In fact, demand is slowing in the United States and Europe."

 

Iran was currently exporting around 2.5 million to 2.6 million bpd, Khatibi said.