Iran Economy Minister says EU embargo to push up oil price

Tuesday, 22 May 2012 00:20 - - {{hitsCtrl.values.hits}}

Reuters: Iran’s economy minister said oil prices will “certainly” rise if the European Union moves ahead with an embargo in July and that sanctions will backfire on those who impose them.

The European Union is preparing for a total embargo on the purchase of Iranian crude oil in July. The United States has also imposed sanctions targeting Iran’s energy and banking sectors.

Iran’s economy minister, Shamseddin Hosseini, was asked in an interview conducted Thursday and aired Sunday on CNN’s “Fareed Zakaria GPS” whether oil prices would rise substantially if the European Union moved forward with the oil embargo.

“Certainly, certainly. Even the IMF says that as a result of these sanctions, oil prices will perhaps reach and hover around $160 per barrel. And the decrease in financial and economic output in Europe will truly be felt,” Hosseini said through a translator.

In January, the International Monetary Fund warned that global crude prices could rise as much as 30 percent if Iran halted oil exports as a result of U.S. and European Union sanctions.

The sanctions are aimed at curbing Iran’s nuclear ambitions. The West suspects Iran’s nuclear program is aimed at developing weapons, while Iran says it is for peaceful energy purposes.

The director general of the U.N.’s International Atomic Energy Agency was to meet with Iran’s chief nuclear negotiator in Tehran on Monday, two days before Iran meets with six world powers in Baghdad.

Hosseini warned that sanctions will create an “economic backlash” against the countries that impose them.

“We believe that those who impose the sanctions have exerted the maximum level of pressure they have been capable of,” he said. “The economic strength of Iran is in such a way that can withstand these sanctions and will not be the only economy to suffer.”

Asked what the price of oil will be in August, Hosseini said, “we must, at least, in order to have sustainable growth for the producers, maintain prices of $100 per barrel.”

“But keep in mind the following: can the industrial powers get out of the current situation they’re in with these prices? Therefore, the answer being obvious, the prices will go considerably higher than $100 per barrel,” he said.

“If we see reforms, tangible reforms in this behavior, we will be in a much better place. If we don’t, we will witness an increase in international oil markets.”