SINGAPORE - Oil prices would rise if the West imposed new obstacles to
investing in Iran's oil sector, although Tehran does not expect such measures
from the United Nations, a senior government official said on Thursday.
"I don't think the Security Council will put sanctions against oil and gas,"
Mohammed Hadi Nejad-Hosseinian, deputy oil minister of the world's
fourth-biggest oil exporter, told reporters at a conference in Singapore.
"If they stop us from more investment in oil, long-term, oil prices will
increase."
Nejad-Hosseinian had told Reuters on Wednesday he did not expect the Security
Council to put curbs on the OPEC member's oil supplies or for Tehran to halt
production, a source of concern for traders who fear Tehran might retaliate
against any punitive measures by disrupting Middle East supplies.
Iran, which pumps about 4 million barrels per day (bpd), failed to meet an
August 31 Security Council deadline to halt uranium enrichment or face the
threat of sanctions, although the European Union has engaged in a new round of
diplomatic efforts this week.
Global benchmark U.S. crude oil prices have fallen by around $11 from
record-highs above $78 a barrel to a five-month low of $67.41 this week, but the
market remains watchful over Washington's drive to get the Security Council to
impose sanctions on Iran.
Apart from the risk to short-term supplies, analysts fear sanctions could
slow much-needed investment in Iran's upstream sector, home to the
second-largest oil reserves, accounting for about 10 percent of the world's
total proven reserves.
A lack of investment - stymied for decades by vicious infighting and layers
of bureaucracy in Iran - would make it more difficult for Tehran to bring
onstream new oilfields or boost output at older ones to meet future demand.
Output is declining at between 250,000 and 350,000 bpd, according to analysis
by FACTS Global Energy.
The U.S. government estimates Iran's mostly onshore fields are falling at a
rate of 10 percent a year and require investment for upgrading and enhanced
recovery techniques.
Foreign oil companies such as France's Total and Japan's INPEX Holding Inc.
are moving into Iran's oil industry despite the U.S. Iran-Libya Sanctions Act
(ILSA), which threatens sanctions against non-U.S. companies that invest
there.