Friday, July 11, 2008

OPEC Leader Issues Warning About Iran and Oil Supply

In today's NYTimes; 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 production.

“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 number.”

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 and long-lasting.

“If something happened there, nobody would be able to solve it,” he said, referring to a war involving Iran.