Gulf News reported that the UAE's oil revenues could get a boost if the country can source enough oil to replace Iranian oil exports to Europe. The European Union plans to halt oil imports from Iran from July 1st 2012.
Benchmark Brent crude prices rose to around USD 111.50 per barrel on Friday before a vote in Iran's parliament which was later postponed to halt exports to the European Union as early as this week in retaliation for EU plans.
It's widely feared that global crude prices could rise as high as USD 150 per barrel if the West's tensions with Tehran escalate, dashing any hopes of a quick recovery in the global economy already reeling under the impact of the European sovereign debt crisis.
Mr Robin Mills head of Consulting at Manaar Energy in Dubai said that "The UAE has limited ability to increase production. But if it can find another 100,000 barrels per day for export to Europe, at current prices it could mean an extra USD 10 million per day in oil export revenues, which is revenue worth having. There's an opportunity for the UAE to increase output and offer to sell that crude to the European Union."
According to the latest figures from Paris-based International Energy Agency, the UAE on average produced 2.5 million barrels per day of crude oil in 2011 while having a sustainable production capacity of 2.74 million barrels per day.
Mr Nasser Sodani deputy head of the parliament's energy commission said that Iran's parliament drafted legislation calling for the government to halt oil exports to Europe until the European Union cancels its planned ban on the country's crude. The bill would also require Iran to embargo imports from countries participating in the EU ban. Last week the EU decided to stop importing Iranian oil but the bloc postponed its ban to give members time to find alternative suppliers.
According to the US Energy Department, Iranian officials have since threatened to retaliate by disrupting shipping in the strategic Strait of Hormuz, through which almost a fifth of the world's oil flows. Europe is Iran's No 2 customer after China, taking 450,000 barrels of Iranian crude a day.
Iran is the second largest producer in the Organisation of Petroleum Exporting Countries after Saudi Arabia, pumping 3.575 million barrels a day of crude in December. Meanwhile, experts believe Iran's war games in the Gulf are nothing more than a tactical move to strengthen its position ahead of future talks with the West to get the sanctions threatening its oil exports lifted.
Mr Samuel Ciszuk London based energy expert said that "The conflict between the West and Iran over the Islamic Republic's nuclear program has intensified, with new US and EU sanctions further tightening Iran's financial isolation. If it goes ahead, the proposed EU oil embargo would dislocate Iranian crude flows from Europe to Asia at a time of challenging marketing conditions."
(Sourced from Gulf News)
