Iranian Oil Minister Rostam Qasemi announced in his recent trip to the United Arab Emirates that if the West intensifies sanctions against the Islamic Republic, the country will shut down its oil exports.
The minister made the announcement on October 23, however, 24 hours after the announcement, oil prices have fluctuated slightly in international markets, meaning Qasemi's remarks had nothing to do with the oil prices.
Presently, the Brent crude is sold at $108.85, which is less than the price at $110 in September.
Moreover, economic growth rate among industrial countries, including China, is now less than forecasts have previously claimed.
China's economic growth rate was reported to be 7.4 percent for the 12-month period, ending in September 2012, which is 0.2 percent less than the figure for the 12-month period, ending in June 2012. In fact, China is grappling with a continuously declining economic growth rate.
The situation is also not so good in the U.S. and the EU. For instance, Germany, as one of the economic giants in Europe, has forecasted an economic growth of around 0.7 percent for the rest of 2012 and even less of 0.1 percent in 2013.
OPEC in its monthly report, which was published on October 11, anticipated that the annual demand growth for oil in the next year would decrease by 20 percent. According to the report, the global demand for oil will increase by 800,000 barrels in 2013, to reach 89.6 million barrels per day.
So, it will be natural for the industrial nations to lower imports of crude oil considering their low economic growth rate. According to the latest report of the International Energy Agency, which was published on October 12, Iran's crude oil exports stood at 860,000 barrels per day in September, compared to 2.4 million barrels per day last year.
Among OPEC members, Iraq produced 3.129 million barrels of oil per day in September, showing 464,000 barrels per day increase year on year. OPEC's total output in the September rose by 829,000 barrels per day compared to last year. The figure even had increased by one million barrels per day in June compared to 2011 output volume.
The world's total crude oil output amounted to 89.88 million barrels per day during September. The current figure is even in excess of the global need to oil next year. On the other hand, the strategic reserves of oil in the EU and U.S. are in a much better position.
The U.S. holds over 700 million barrels of crude oil in United States Strategic Petroleum Reserve. Considering that Iran's economy mostly relies on oil incomes, it cannot survive for a long time without such revenues. In short term, EU and U.S. can release a portion of their strategic reserves to regulate prices in the oil market.
It is important to note that Iranian oil is mainly exported to Asian countries and some 160,000 barrels of oil is also exported to Turkey. The Asian buyers, including China and India, are the half-hearted friends of Iran.
Cutting Iranian oil exports will face economy of such countries with problems, translating into losing few trade partners of Iran and facing the country with huge political and economic losses. Neither EU nor the U.S. currently import Iran's crude.Dalga Khatinoglu