Iran not solely behind high oil prices: IEA economist

Iran not solely behind high oil prices: IEA economist

ISTANBUL - Hürriyet Daily News
Iran not solely behind high oil prices: IEA economist

A gas station attendant pumps gas in Portland, Oregon. Oil prices briefly spiked to the highest level in three weeks. AP photo

Iran’s nuclear dispute is not the main reason behind recent high oil prices, but it does affect them, according to Fatih Birol, the chief economist at the International Energy Agency, Western countries’ energy watchdog.

Oil prices slipped yesterday after nuclear talks over the weekend between major crude producer Iran and world powers eased concerns over Middle East supplies, analysts told Reuters. Brent North Sea crude for delivery in June fell $1.16 to stand at $120.05 in London midday deals.

The main reasons behind rising prices are high demand and low production in non-Organization of Petroleum- Exporting Countries (OPEC) member states, Birol told the Anatolia news agency. “One reason is that oil demand is increasing quickly. Demand will increase by 1 million barrels this year.” The second factor is disappointing levels of oil production in non-OPEC countries, which made the market highly sensitive to supply and demand balances.

Tensions between Iran and the international community over its nuclear program, as well as problems in Sudan and Nigeria, have stretched the sensitive balance even more, Birol said. “Iran is not the major factor, but it has been the last straw. The major factor is the developments in supply and demand, or the fundamental market.”

Crude oil prices broke the $100 level for the first time this year in January due to tensions over Iran’s nuclear program, and have exceeded $120 per barrel since February 23, when Iran halted oil exports to France and England. “If Europe does not see a serious recession because of [the economic crisis in] Spain and Greece, I do not believe prices will fall below current levels,” Birol said.

Meanwhile, Bob Dudley, chief executive officer at BP, said during a meeting with Energy Minister Taner Yıldız that the Istanbul summit on Iran will ease oil prices, as the current level is an artificial one.
“Oil prices are notably high. This results from an artificial situation. The talks in Istanbul [nuclear negotiations between Iran and the P5+1 countries] will ease this tension,” Anatolia quoted him as saying. k HDN