Gulf states ready to offset Iran oil shortage

RIYADH - A senior Saudi oil official said Gulf Arab nations are prepared to offset any potential loss of Iranian crude in the world market in remarks that could allay concerns as oil prices climbed on Wednesday.

The remarks came as Iran?s vice-president warned his country was ready to close the Strait of Hormuz ? through which a sixth of the world?s oil flows ? if Western nations impose sanctions on its oil shipments. Western nations are growing increasingly impatient with Iran over its nuclear programme, and worries abound that new sanctions on the country could target its oil exports.

While the comments by Vice-President Mohamed Reza Rahimi may be little more than a warning by the country, they still stoked fears in the market.

A closure of the strait could force shippers to take longer, more expensive routes that would drive oil prices higher. It also potentially opens the door for a military confrontation with Iran that would further rattle global oil markets.

The Saudi oil ministry official told The Associated Press that Opec kingpin Saudi Arabia and other Gulf producers were ready to step in if necessary.

He did not say what other routes the Gulf nations could take to ship the oil if the strait was closed off.

The official spoke late on Tuesday on condition of anonymity because he was not authorised to discuss the issue.

Saudi Arabia, the world?s largest oil producer, has been producing about 10 million barrels per day, leaving it with over two million barrels per day in spare capacity.

Source: http://www.khaleejtimes.com/darticlen.asp?xfile=data/business/2011/December/business_December518.xml&section=business

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