Powers talks to affect global crude market

The minister told a news conference at Tehran Oil Show that the way the Europeans would treat Iranians would be a determining factor for the oil market. "We hope that the planned Baghdad talks would go ahead like the Istanbul talks. In case the Europeans refuse to lift embargo on Iran's oil, the market and more specifically energy supply security would be significantly affected. The prices would be affected too, but we can't forecast to what extent," he said according to the oil ministry's website, Shana. "We are waiting for good news in the future," Qassemi said, noting that the news of Iran's crude exports ban has resulted in an 18-percent spike in the oil prices. "Many Europeans continue to buy Iran's oil although the news of crude ban was announced months ago," he said. He expressed hope that Baghdad talks would conclude positively for both sides. Otherwise, he warned, the energy market would see serious changes. Qassemi said Iran has already halted supplying oil to Shell oil company. He added the company has yet to settle its debts towards Iran. Regarding oil exports to Greece, he said, "Greek authorities had problems with payment, but our exports to this country have not officially stopped." "Only Greece and Shell owe to Iran for oil and other clients have already settled," he said. "Oil exports to Britain and France have come to a halt," he added. Some oil exports contracts have been renewed and some others are being negotiated, Qassemi said. "We have not lowered our oil exports which are going ahead as usual," he said. The official touched on the construction of underground facilities to store crude and said, "Any country plans for strategic storage facilities. We have insufficient facilities now and we are planning to construct more of them." Iran supplies oil to a handful of countries, he said, adding that new contracts would be signed if Europe decides to boycott Iran's crude. The minister said 10 agreements were signed in the second half of last calendar year to March for the development of oil and gas fields. "Operations are under way in Azar, Yaran and Farzad A fields," he said. He boasted that more than 40 countries are attending Tehran Oil Show at a time Iran is facing tough sanctions. "This massive presence shows that free trade is impossible to be restricted or impeded," said the Iranian minister. The International Monetary Fund (IMF) has also warned that crude oil prices may spike by up to 30 percent if Iranian supplies were disrupted, causing "serious consequences" for the global economy. The standoff between Iran, the world's second-largest supplier of oil, and the West over the Islamic Republic's nuclear program has always been seen as a flashpoint that could sharply increase world crude prices. "Clearly it would be a shock to economies if there was a major shortage of exports of oil out of Iran, it would certainly drive up prices for a period of time," (IMF) Managing Director Christine Lagarde said. The International Monetary Fund (IMF) has calculated that an interruption in oil supplies from Iran could increase oil prices by 20 to 30 percent, said Lagarde. "A sudden and brutal rise in the price of oil" from Brent crude's current levels of $125 a barrel "would have serious consequences on the global economy" until other oil-exporting nations were able to bridge the gap, she added. Iran has been exporting about 2.5 million barrels of crude oil per day (bpd), with 65 per cent going to Asia and 30 per cent to Europe. It is the second largest oil producer after Saudi Arabia in the Organization of Petroleum Exporting Countries (OPEC). Oil prices have shot up in recent months in the wake of Iran's decision to halt its crude exports to certain European countries in response to the European Union (EU) oil embargo on Tehran. Iran's Oil Ministry announced on February 19 that it had cut oil sales to British and French firms. Tehran also announced it may also halt oil exports to more European countries. The decision by Iran came after European Union foreign ministers agreed to ban oil imports from Iran and freeze the assets of the Iran's Central Bank across the EU in line with a US-led effort to impose further pressure on the Iranian economy over its civilian nuclear program. Meantime, news of Iran cutting supplies to six EU member states caused a lot of concern in Europe and in the world's markets. The bloc currently buys about 18% of Iran's oil exports. Iran is the world's 4th largest oil supplier, with China, Japan, and India its largest buyers.