Iran OPEC government warns Arab oil producers

Reuters News
Posted: Jan 15, 2012 6:23 AM
Iran OPEC government warns Arab oil producers

By Ramin Mostafavi

TEHRAN (Reuters) - Iran's Gulf Arab neighbors should not raise their production to replace Iranian oil if the European Union goes ahead with a ban on Iranian crude imports, Iran's OPEC governor said Sunday.

The EU has agreed in principle to ban imports of Iranian oil, while the United States has pressured Asian buyers to reduce imports to starve Tehran of revenue for its disputed nuclear program.

Asian leaders from some of Iran's biggest oil sales markets are already touring the Middle East to secure supplies, as tension over Iran's nuclear plans builds, while European buyers may rely more heavily on Arab oil producers should an EU ban come into effect.

Iran OPEC Governor Mohammad Ali Khatibi said Tehran would see any move to fill in for Iranian crude as Gulf Arab oil producers siding with Iran's western opponents.

"If the oil producing Gulf states give the green light to replacing Iran's oil these countries would be the main culprits for whatever happens in the region -- including the Strait of Hormuz," Khatibi told the Sharq daily newspaper.

"Our Arab neighbor countries should not cooperate with these adventurers... These measures will not be perceived as friendly."

EU countries have proposed "grace periods" on existing contracts of one to 12 months to allow companies to find alternative suppliers before implementing an embargo.

Khatibi, a key part of Iran's OPEC negotiating team, said there was a good chance that the EU would not go through with its threat to ban Iranian crude imports if Gulf Arab producers refused to back it.

Saudi Arabian Oil Minister Ali al-Naimi said Saturday the world's biggest oil exporter was ready and able to meet any increase in demand, without making any reference to sanctions on OPEC rival Iran, while Chinese Premier Wen Jiabao visited the kingdom to boost cooperation with China's biggest oil supplier.

China is also Iran's biggest oil buyer, importing over half a million barrels of Iranian crude a day to fuel its economic growth, making Beijing wary of upsetting Tehran and an opponent of sanctions against it.

Iran, OPEC's second-largest oil producer after Saudi Arabia with output of about 3.5 million barrels per day, has threatened to block the vital oil export route of the Strait of Hormuz if further sanctions prevent it from selling oil.

About a third of all sea-borne oil was shipped through the Strait of Hormuz in 2009, according to the U.S. Energy Information Administration (EIA), and U.S. warships patrol the area to ensure safe passage.

The United States has said it would not tolerate any attempt to disrupt shipping in the strait, but Iran's navy commander Habibollah Sayyari said Tehran could control the vital export route.

"Iran has always exercised domination over the Strait of Hormuz," Sayyari was quoted by the official IRNA news agency as saying.

The United States and its allies suspects Iran is trying to develop nuclear weapons but the Islamic Republic says it is only interested in nuclear technology for generating electricity.

(Writing by Ramin Mostafavi, editing by Jonathan Thatcher and Daniel Fineren)