The Director of Energy, Markets and Security, International Energy Agency? (IEA), Didier Houssin, has said Nigeria would be among the oil exporting nations that would help to cushion the adverse effect of losses in the international oil market due to sanctions placed on Iranian oil.
According to him, in the second half of this year, any loss of Iranian oil supplies should be compensated with an additional spare capacity in the United Arab Emirates, Nigeria and possibly Saudi Arabia and? with higher production in countries outside the Organisation of Petroleum Exporting Countries. “There are alternative supplies that can make up for any loss of Iranian exports,” he said.
?The IEA official pointed out that refiners in the EU have already started reducing oil imports from Iran ahead of a ban on July 1. With Asian buyers limiting their exposure to the Islamic Republic to avoid being targeted by U.S. banking sanctions, Iran may have to curb exports altogether.
Iran which normally exports 2.2 million barrels of crude a day, has already cut supplies to France and the U.K. and has threatened to halt supplies to other EU member States. But even if that happens, “The impact of such move will be extremely limited,” Houssin said. In retaliation to the pressure on its nuclear programme, Iran has also warned that it may block the Strait of Hormuz, through which it transits one-fifth of global oil supply.
“The IEA stands ready to react if there is a major supply disruption which is not the case for now”, Houssin said. Still, the threat has been reflected in higher prices, pushing the cost of oil at levels dangerous for the world economy, he said.
“Our indications is that the share of the oil cost compared to the global gross domestic product (GDP) has reached a level close to that in 2008,” he said.
At the time, a spike in oil prices to $147 a barrel was partly blamed for worsening the global recession. Prices, earlier on Monday rose above $121 a barrel in London on new fears about Iranian supply. “This current level of price could represent a risk to the global economic recovery,” Houssin added.