Iran Cuts Oil Exports to France and Netherlands, Mehr Says
February 16, 2012, 4:01 AM ESTBy Ladane Nasseri
(Updates with Mehr report in first paragraph, Press TV report in fourth, OPEC governor and Hellenic in last four.)
Feb. 15 (Bloomberg) -- Iran halted crude exports to France and the Netherlands and threatened to stop shipments to four other European countries, state-run Mehr news agency reported, citing an unidentified official at the National Iranian Oil Co.
The state-run Fars news agency gave a conflicting account, citing an unidentified oil ministry official as saying Iran warned the six European Union nations without cutting exports to any of them. An Iranian oil ministry official, declining to be identified, said today he was unable to confirm a decision to suspend exports. The EU also said it wasn’t immediately able to confirm a halt. Oil prices gained.
“The price jumps initially on this kind of news because of all the political risk jitters, and it looks like we’re headed to $120, but after that it will come off again,” said James Zhang, a strategist at Standard Bank Plc in London.
A suspension of Iranian exports would come amid rising tension in the Persian Gulf. Iran said Dec. 14 it was planning military maneuvers in the Strait of Hormuz, the 34-kilometer- wide (21-mile) chokepoint through which about 20 percent of global crude supplies flow. The EU last month announced a ban on Iran’s oil imports as of July 1, even after the nation’s Vice President Mohammad Reza Rahimi threatened to close the strait should the 27-nation bloc go ahead with the embargo.
Ultimatums
Iran gave ultimatums to Italy, Spain, Portugal and Greece regarding the renewal of supply contracts of more than two years, according to Mehr. Fars reported that these four, together with France and the Netherlands, were given warnings when the foreign ministry in Tehran summoned their ambassadors earlier today to protest against EU sanctions over Iran’s country’s nuclear program. State-run Press TV reported, without citing anyone, that Iran will end oil sales to the six unless they agree to long-term contracts and guarantee payments.
Brent crude oil for April settlement rose as much as $2.64, or 2.3 percent, to $119.99 a barrel on the ICE Futures Europe exchange. It later pared gains to trade at $119.00 at 4:01 p.m. in London.
“There’s no fundamental change to the underlying supply- demand balance,” Standard Bank’s Zhang said, adding that the price surge should be viewed as “just the implementation of the EU sanctions, brought forward by a few months.”
Political Move
EU governments agreed last month to halt oil purchases from Iran. The European Commission, the EU’s executive arm, had “no information at all” that Iran has acted unilaterally, Michael Mann, an EU spokesman, told reporters in Brussels today. An official at Portugal’s Foreign Affairs Ministry declined to comment.
Iran is the second-largest producer in the Organization of Petroleum Exporting Countries, after Saudi Arabia.
Without commenting directly on whether Iran has banned exports to European nations, the country’s OPEC governor, Mohammad Ali Khatibi, said the EU’s embargo is a political tool that only increases the final cost to users.
“The consumers have placed embargoes on shipping, selling, and investment in our country, they use embargo as a tool,” he said in a phone interview from Tehran today. “When there is tension, the reaction of the market is clear, it is normal, prices go up.”
Hellenic Petroleum SA, Greece’s largest refiner, said it hasn’t yet been informed of any oil supply cuts from Iran.
“We haven’t been notified and are confident we’ll find alternatives if and when we have to,” Vasilis Tsaitas, a company spokesman, said today by phone from Athens.
--With assistance from Grant Smith and Nidaa Bakhsh in London, Anabela Reis in Lisbon and Bruce Stanley and Ayesha Daya in Dubai. Editors: Bruce Stanley, Stephen Voss
To contact the reporter on this story: Ladane Nasseri in Tehran at lnasseri@bloomberg.net
To contact the editor responsible for this story: Stephen Voss at sev@bloomberg.net
