U.S. puts squeeze on Iran’s oil fields

A campaign to dry up financing for projects poses a threat to Tehran’s ability to maintain exports, analysts say.

LONDON — As Washington wages a very public battle against Iran’s quest for nuclear power, it is quietly gaining ground on another energy front: the oil fields that are the Islamic Republic’s lifeblood.

Iran’s oil industry has raked in record amounts of cash during three years of high oil prices. But a new U.S. campaign to dry up financing for oil and natural gas development poses a threat to the republic’s ability to continue exporting oil over the next two decades, many analysts say.

The campaign comes at a moment of unique vulnerability for Iran’s oil industry, which also faces challenges from rising domestic energy consumption, international isolation, a populist spending spree by President Mahmoud Ahmadinejad and trouble closing contracts with foreign oil companies — a recipe for potential disaster in a nation with one of the world’s largest reservoirs of oil.

“If the government does not control the consumption of oil products in Iran … and at the same time, if the projects for increasing the capacity of the oil and protection of the oil wells will not happen, within 10 years, there will not be any oil for export,” Mohammed Hadi Nejad-Hosseinian, Iran’s deputy oil minister for international affairs, said in a telephone interview.

If Iran were to suddenly stop exporting its 2.6 million barrels of oil a day, such as in the event of a military strike, world oil prices probably would skyrocket. But a gradual decline might be offset by other OPEC members, analysts say, particularly as Iraq increases its oil production and Saudi Arabia carries out plans for significant increases in its production capacity.

The efforts by the United States and its allies over the last few months to persuade international banks and oil companies to pull out of Iran threaten dozens of projects, including development of Iran’s two massive new oil fields that could expand output by 800,000 barrels a day over the next four years. CONTINUE

January 8, 2007 | 3 Comments »

Subscribe to Israpundit Daily Digest

3 Comments / 3 Comments

  1. As soon as I read this…

    Likewise, increased output from refinery construction is being outpaced by the swelling number of young Iranians with a fondness for gas-guzzling cars.

    …..I realised the article was definately yanking my chain.

    US “pressure” on Iran serves to cloak the – covert, yet very demonstrable – cooperation between the US and Iranian Islamist establishments, and make the handover of Iraq to the Iranian Islamists seem like a “tragic error” caused by “the incompetence of the Bush administration”, rather than as an intended objective.

  2. But it just happens to be a convenient truth for them that they do need nuclear power.”

    Tought shit. I don’t care if Iran needs nuclear power, they don’t get to have it because they will use it for nuclear weapons.

  3. I wouldn’t place to much hope in this considering the amount of time it would take to be effective. You also have to consider that money will flow in back doors, Saddam was successful in making deals to keep the money flowing, nor did being broke hinder N. Korea from getting nukes. You don’t think Russia and China won’t do business with Iran if they can realize any gains? If the Islamic apocalyptos are determined to have nukes there is probably only one way to stop them. That is a truth few wish to face.

Comments are closed.