AN EU oil embargo on Iran came into full force yesterday after exemptions on some contracts and insurance ended, boosting crude prices and putting pressure on the Persian Gulf nation to halt its nuclear-enrichment program.
The reduction in Iranian exports may become the biggest supply disruption from a member of the Organisation of Petroleum Exporting Countries (Opec) since an armed rebellion all but halted pumping in Libya last year, according to the International Energy Agency.
It also comes as a strike by Norwegian workers is curbing flows from North Sea fields.
“We expect Brent oil prices to be supported by Iranian oil sanctions and potential loss of supplies from the North Sea,” Gordon Kwan, head of regional energy research at Mirae Asset Securities based in Hong Kong, said.
Brent futures fell below $90 a barrel on June 21st for the first time in 18 months, as concern that Europe’s debt crisis would spread sapped the outlook for fuel use worldwide.
Now, the Iran embargo and Norwegian strike are stoking speculation about a rebound in prices.
Iran is the second-biggest oil producer in Opec after Saudi Arabia. It produced about 3.3 million barrels a day in May.
Full implementation of sanctions is expected to remove about one million barrels a day during the second half of the year.
Iran pledged to counter the impact of an EU oil embargo which took full effect yesterday, saying it had built up $150 billion (€118 billion) in foreign reserves to protect itself, according to reports. – (Bloomberg)
