Rocky Road for oil as Iran crisis boils
Japan, the second largest consumer of Iranian crude, is backing new sanctions against Iran. Japanese Finance Minister Jun Azumi, says it is a way to reduce his country’s dependency on energy from Iran, after meeting US Treasury Secretary Timothy Geithner in Tokyo. "We wish to take planned and concrete steps to further reduce this share, which now stands at 10%."Another strong Asian economy and core consumer of Iranian oil – China did not voice support for US-led sanctions against Iran. Beijing says it hopes Tehran and the International Atomic Energy Agency would "stress co-operation", saying the oil trade with Iran should not be linked to the nuclear issue. Meanwhile the Nigerian oil union has started shutting down platforms in support of demands for the return of fuel subsidies. Valery Yazev, Russian State Duma deputy, says if the West bans Iranian oil imports prices will go up. "My suggestion is that prices will be at about 200 dollars per barrel. This will, in turn, lead to substantial gas price increases," he said. Yazev, who is head of the Russian Gas Society, believes that “in terms of effect on the Russian economy – oil price rises should be lauded." He added that “in case the world economy stagnates due to high oil prices then production will slow down as demand slides.”Gareth Lewis-Davies, Energy Strategist at BNP Paribas, says countries will get oil via other routes, for example, Saudi Arabia. However, in the longer terms the demand would be impossible to meet through one channel while alternative routes still need to be examined. On the other hand other suppliers such as Russia could benefit from an Iranian oil route closure.