[R-G] OPEC Leader Issues Warning about Iran and Oil Supply
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Thu Jul 10 23:44:46 MDT 2008
July 11, 2008
OPEC Leader Issues Warning About Iran and Oil Supply
By JAMES KANTER
VIENNA — The head of the Organization of the Petroleum Exporting
Countries warned on Thursday that oil prices would experience an
"unlimited" increase in the event of a military conflict involving
Iran because the group's members would be unable to make up the lost
"We really cannot replace Iran's production — it's not feasible to
replace it," Abdalla Salem el-Badri, the OPEC secretary general, said
in an interview.
Iran, the second-largest producing country in OPEC after Saudi Arabia,
produces about four million barrels of oil a day out of the daily
worldwide production of close to 87 million barrels.
The country has been locked in a long dispute with Western nations
over its nuclear ambitions.
In recent weeks, the price of oil has risen higher on speculation that
Israel could be preparing an attack on the country's nuclear
facilities. The saber rattling intensified this week with missile
tests by Iran.
That has further unnerved oil markets because of concerns that any
conflict with Iran could disrupt oil shipments from the gulf. In New
York, crude oil climbed $5.60, to $141.65 a barrel.
"The prices would go unlimited," Mr. Badri said during the interview,
referring to the effect of a military conflict. "I can't give you a
Iran has insisted that its nuclear program is for purely peaceful purposes.
Mr. Badri, a former oil executive who has headed the oil industry in
Libya and served as deputy prime minister of that country, called for
a peaceful solution, and he hinted that an additional conflict in the
Middle East besides the continuing conflict in Iraq would be severe
"If something happened there, nobody would be able to solve it," he
said, referring to a war involving Iran.
He said that current geopolitical tensions were among the main reasons
for the high price of oil. He said that a shortfall in refining
capacity and a weak dollar were other factors, but he reiterated
OPEC's position that speculation on oil markets probably was the most
He insisted that reserves of oil were plentiful and that worries about
scarcity were misplaced.
Supplies from Russia and Norway and other nations outside the
13-member OPEC will keep growing, helped by technologies like turning
gas and coal into liquid fuel and extracting oil from tar sands and
shale, he said.
Even so, he also sought to assuage concerns about a supply shock,
saying that OPEC members, which contribute about 40 percent of daily
worldwide production, were already investing $160 billion in new
production capacity up to 2012.
But he said investment in future capacity could be frozen, potentially
sharpening a dispute with customers over whether sufficient steps were
being taken to meet demand.
Steps by the European Union and in the United States to cut dependence
on fossil fuels meant that OPEC had no alternative but to take a
cautious approach before going ahead with plans to invest up to $540
billion in oil production up to 2020.
"If we don't see the demand, we are not going to invest," Mr. Badri
said, adding there was doubt over how much money members would invest
after 2012. OPEC members "don't want to spend their money on something
they cannot use," he said.
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