Oil companies cut shipments to Iran

Oil companies are reducing fuel exports to Iran as the Middle Eastern country may face sanctions because of its nuclear program, the Wall Street Journal has said.

BP Plc stopped shipments to Iran at least six months ago. While Total SA have said that it would stop gasoline exports to Iran if the US and other European nations call for a halt on fuel exports.

US President Barack Obama has said that Iran may face serious sanctions if it doesn't halt its nuclear development program. Both the US and European governments say that it is intended to produce atomic weapons.

Representatives of the five permanent members of the United Nations Security Council along with Germany are scheduled to hold talks with Iranian officials 1 October in Geneva.

"I'm not sure if sanctions against fuel imports by Iran will actually be imposed," said Victor Shum, senior principal at US energy consultants Purvin & Gertz Inc. in Singapore. "France has already opposed it and China is sending a quite a bit of gasoline to Iran now. There are still avenues to allow Iran to obtain fuel."

At the moment, Chinese state-owned companies are undermining the US in its efforts to isolate, by supplying 30,000 to 40,000 barrels a day of petrol to Iran.

Companies in China "conduct normal trade relations with Iran" within the scope of the UN resolutions, the FT said, citing a Chinese official in Washington.

The Asian nation exported 5,275 tons, or 160 barrels a day, of oil products, including jet fuel, diesel and fuel oil, to the Islamic country in the first eight months, according to Chinese customs data.

Iran currently imports around 140,000 barrels a day of gasoline and diesel at a cost of US$5 billion to US$7 billion annually to meet domestic demand, according to the Wall Street Journal report.

Iran is already under three sets of UN sanctions for refusing to suspend uranium-enrichment work, a process to isolate an isotope needed to generate fuel for a nuclear power reactor or, in higher concentrations, to make a weapon. Reactors use heavy water to produce weapons-grade plutonium.

Iran denies it's planning to make a bomb and says the program is aimed at generating electricity.

Despite the fact that Iran imports its fuel, its fuel is still on the cheaper end of the scale in the world, per gallon, at US$1.51 If you want the lowest price, you'll have to take a trip to Venezuela, where you'll pay US$0.17 per gallon. You just don't want to visit Sierra Leone, where you have to pay a hefty US$18.40 per gallon.

But then if fuel exports are being cut to Iran, there might be a pretty hefty price rise in the future.

24/09/2009

 

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