Refinery attacks send shivers through market

Press, 25 September 1980, Page 6

Refinery attacks send shivers through market

: NZPA-Reuter London Reports that Iraq and Iran have bombed each other’s oil ■ installations aroused concern in the oil industry yesterday ; that the fighting could lead to prolonged loss of production from the two nations. Oil-industry executives said that a temporary loss would cause no immediate shortage because world stocks are at record-high levels, but said a prolonged interruption could have serious repercussions.

i Iran and Iraq together I export at least 3.5 million {barrels per day of oil and I refined products. The oil industry calculates that it would be necessary to take only about 2.5 million barrels per day out of the market to dry up the present glut and set prices rising again.

Prices on the free spot market showed no immediate increase after news of the attack today on Iran’s Aadan refinery. But one trader said: “That could escalate the situation and if that happened the spot market might go crazy.”

I • Panic-buying on the spot market occurred in 1979 when oil was in short sup-. ply; following a post-revolu- ’ tion slump in Iran exports. Saudi Arabia and Iraq then made up the shortage, but heavy buying for stocks helped drive up oil prices from under SUSI 3 a barrel in 1978 to an average of about SUS 32 today. Saudi Arabia is now producing 9.5 million barrels a day, but industry officials said it has the capacity to pump an additional one million barrels.

I Iraq’s biggest customer is France, which takes 600,000 barrels per day — 25 per cent of its total oil imports — from Iran. Brazil gets about 45 per cent of its oil from Iraq.

Iran sells to nearly a score of countries, mostly in contracts for small quantities.

Western oil industry officials said Iranian exports of under one million barrels per day .were marginal to world supply and demand. But Iraq’s exports of 2.8 million barrels per day make it an important supplier.