Embargo could force oil prices down

Press, 2 October 1987, Page 6

Embargo could force oil prices down

NZPA-Reuter . Tokyo An embargo onlranlan oil imports into the United States wffl.encourage Teheran to “dunyToU in the European market. Far East oil industry sdUrees said. ■. • “Iran will have to sell the oil somewhere,** said a trader for a big oil company. “I thinK'they'll dump ItinEurope,, so well see some MB deAn . anbargo hms approved by. .th&/-:fUnlted States Senate on MMiday amid heightened tension between Washington and Teheran. It has still to be considered by the Bouse of Representatives but is almost certain to win approval there, : United States oil analysts said; The . approval .fouows news that Iran /wait fthe United States’ second biggest supplier of foreign crude oil in July, accounting for more than H per cent of the county's imports. <? '

Japanese oil companies expect the United States to press Japan 'to follow j suit if the embargo bin is | passed. ‘■’■t "That:might-he a big -1 problem for us, but it will surely be good news tor --?a other Middle E* Gulf 1 producers,” saidooe oil a refiner. ■■ .j 1 Industry . HgMflgMd J Japanese participation in 1 the embargo woulOen- ~a liven the Middle-Easf-Spot !' market, . with $$ *m- ''a panics looking for cargoes to replace the/' total 530,000 barrels, per: day ■'•J (bpd) the two countries buy from Iran. - I Spot crude oil prices showed no immediate re- i action on Wednesday to the proposed ban, oil | traders said. | Middle East benchmark :jS grade Dubai was quoted q at SUSI7.IO to 3U517.15 ($26.16 to $26.23) a barrel, unchanged from Tuesday levels. •. > “A United States em- | bargo means Iran will lose one of its biggest < customers and so it will increase its marketing efforts to Europe and the £ East,” a' Japanese oil re- j finer said. Industry sources said there, was very little Iran ' f could do to increase its exports to Japan, which already has long-term contracts to buy . about 300,000 bpd of Iranian | crude. -.V--’V -1 Tokyo traders : were sceptical that Japan, which has adopted a neu- || tral stance in the IranIraq conflict, would be willing to follow a United States move soon. “I think Japan will drag its feet as long as possible on this issue, but the pressure is obviously going to build up,” one trader said.