<tit>OIL PRICE MAY REACH $100 PER BARREL
Oil price may reach $100 per barrel if the UN Security Council decides to introduce economic sanctions against Iran. Majority of the oil market experts polled by The Wall Street Journal drew this conclusion. Analysts pointed out that the report about intention of Tehran alone to restart its program of research into enrichment of uranium caused the recent growth of prices to $70 per barrel. Market players presume that suspension of oil export will be a response of Iran to introduction of sanctions despite all consequences negative for the country.
Introduction of sanctions against Iran look quite realistic now. The country is not going to make any concessions with regard to its nuclear program yet. On January 23, Hossein Entezami, official representative for the supreme council for national security of Iran responsible for nuclear issues, announced that Tehran would stop checks of its nuclear objects by inspectors of the International Atomic Energy Agency and would restart all work in the framework of the nuclear program including enrichment of industrial scale should the Iranian nuclear dossier be handed over for consideration to the UN Security Council. Entezami hopes that "the matter will not come to the UN Security Council, otherwise everyone will lose." At any rate, he adds, "In any case, only enrichment of uranium on industrial scale and not laboratory research may be the subject of negotiations."
Oil export accounts for 80% of the entire export revenue of Iran. The country produces 2.5 million barrels of oil per day, which is 1 million barrels more than international reserve oil producing capacity that may be put into operation. Iran also controls the Ormuzd Strait that is strategically important for maritime transportation in the Persian Gulf. The Wall Street Journal quotes James Bartis, senior analyst of Rand Corp, as saying, "Even if Iran withdraws only a part of its oil from the market, for example, 500,000 barrels per day, prices will exceed the barrier of $100 per barrel anyway." Some other experts are more cautious and are inclined towards the figure of $75 before appearance of oil from the strategic reserves and decrease in demand for oil.
International Energy Agency uniting 26 of the most developed oil consuming countries possesses hydrocarbon reserves of 1.48 billion barrels, which approximately corresponds to the volume of Iranian export for 600 days. According to some estimates, OPEC can add 1.5 million barrels per day to global output. This will be mostly oil from Saudi Arabia. In certain circumstances, Russia can increase its daily production by 500,000 barrels too.
Political crisis in Kuwait became another factor exerting serious influence on oil prices. Meanwhile, the parliament of Kuwait planned to vote on the Kuwaiti project worth $8.5 billion by the end of January. The project is aimed at increase of the oil producing capacity of Kuwait with assistance of foreign companies. However, the current crisis of power in the country and the relevant debates in the parliament may postpone the project for many months.
Experts hoped that the project would allow increase of oil production at the fields in the north of the country already in 2006. The Energy Minister of Kuwait warned that the country would be unable to increase production from 2.5 million to 4 million barrels per day by 2020 if foreign companies were not allowed to return to the oil industry of the country nationalized 30 years ago.
According to forecasts of the International Energy Agency, if oil producing countries do not invest enough money in increase of production high oil prices will pose a serious threat for the whole of global economic growth.
<ref>Gazeta, January 24, 2006
RVR
