As the European Union prepares to ban Iranian oil and the U.S. turns the screw on payments, oil executives and policymakers say China and Russia stand to gain the most and Western oil firms and consumers may emerge the biggest losers, Reuters reported.

The EU formally imposed an oil embargo on Iran and agreed to a freeze on the assets of the Central Bank of Iran on Monday, but existing contracts will be honored until July 1.

However, in a pre-emptive move the Iranian parliament on Saturday finished drawing up a draft plan calling for a halt to Iran’s oil exports to the European countries that voted for sanctions on Iran’s oil industry.

President Mahmoud Ahmadinejad also announced on Thursday that “we have attained a status that we need not sell oil to Europe.”

Iran will continue to sell much the same volume of oil - 2.6 million barrels per day - but almost all of it will flow to China, they reason. And being pretty much Iran’s only remaining customer, Beijing will be able to negotiate a much reduced price.

The IMF said this week that crude oil prices could rise 20 to 30 percent if Iran were to retaliate by halting its oil exports altogether.

“What we say is that oil is fungible. Iranian oil will still find its way into the market, to Asian markets, China and possibly at a lower price,” a top Saudi source told Reuters, speaking on condition of anonymity because of the sensitivity of the matter.

“But if let’s say 50 percent of Iranian oil is lost, we have spare capacity, we have the capacity to replace it as Libya has shown,” he added.

Russia too stands to gain from Western sanctions on Iran. The world’s biggest oil producer is well positioned to raise its market share in Europe, despite misgivings among some Europeans about relying too heavily on Russia for oil and gas.

EP/PA
END
MNA

News Code 49740

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