Iran’s state oil company announced on Sunday the potential ban of oil sales to the European Union, a move they say will push the cost of oil to $120 to $150 per barrel. News of the potential export ban comes just ahead of a European Union proposal that would place embargo’s on the country’s supply line.
As part of the countries plan Head of the National Iranian Oil Company Ahmad Qalehbani said the region will work on refining more of it’s own crude domestically instead of selling it to international partners. Iran is currently the second largest oil producer in the world (3.5 million barrels daily) however they purchase refined oil for energy use from countries where they had previously sold the product.
Last weak the EU announced an embargo against Tehran over the countries controversial nuclear program which many countries believe is being used for the sole purpose of creating nuclear weapons, a claim the Iranian government has repeatedly refuted.
While the EU Embargo is not set to take effect until the summer months in a bit of saber rattling the Iran government has said they may cut off supplies early.
According to Iranian officials just 18 percent of the countries output is provided to the EU and the country believes they can easily find replacement customers while punishing the European Unions economy. The ability to find those new customers however may not be “easy” as predicted as the United States has promised to place embargo’s against any country that does business with Iran in the coming months.
Speaking to the IRNA Qalehbani noted:
“It seems we will witness prices from $120 to $150 in the future.”
Speaking about his countries plans to sell their product elsewhere he adds:
“The sale of some 18 percent of Iranian oil, to a market other than the EU, is quite possible. But our long term idea is to increase refining capacities to produce valuable products.”
While Iran’s officials have downplayed the effect of an export ban on their own country the fact is they receive nearly 80% of their countries revenue from the sale of crude oil.