(Dow Jones) VIENNA–The European Union has no intention of halting or delaying the implementation of shipping insurance-related sanctions against Iran, due to come in on July 1, and could cope with any extra loss of Iranian crude exports stemming from these measures, EU Energy Commissioner Gunther Oettinger said Wednesday.
The support of key suppliers Russia and Saudi Arabia, in addition to oil inventories held within Europe, means that regional oil markets could cope with any loss of Iranian crude even if as some analysts predict the shipping sanctions make the impact of overall sanctions much larger than originally intended.
“We have confidence in our most relevant partners–take Russia, take Saudi Arabia. They are really flexible as they have been in the last months,” Mr. Oettinger said at the Organization of Petroleum Exporting Countries seminar in Vienna. “We have a huge storage capacity and we can lift it whenever we have to,” he added.
“We are sure we can organize a functioning level of security of supply in the next months and years,” and cope with any effects of sanctions on Iranian oil supply, he said.
The International Energy Agency estimates that the EU embargo on Iranian oil and U.S. sanctions against Iran’s central bank could take between 800,000 and 1 million barrels a day of Iranian crude off the market.
Other EU sanctions are affecting the ability of Asian importers to insure ships carrying cargoes of Iranian crude, over and above the original sanctions. Analysts at Barclays said these sanctions could take the total loss of Iranian exports to 1.5 million barrels a day, a level that could prompt an oil price spike.
Mr. Oettinger did not deny that the sanctions could impose some extra costs on oil consumers, but said they were still the right approach. “An oil ban, and to cut relations between financial institutions is the best, pragmatic approach to give some pressure to Tehran. Maybe this has some cost.”
Lower levels of economic growth in the U.S. and China, and lack of growth in Europe, mean oil import needs are likely to be lower than expected anyway, he said.
– By James Herron, Dow Jones Newswires