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Iran vulnerable on oil product imports: US

NEW YORK: Iran’s heavy dependence on imported oil products is “a vulnerability” for the nation, a top-ranking US Energy Department official said on Wednesday.

Iran and the West are engaged in a diplomatic dispute over Iran’s nuclear program, which Tehran says is for electricity and not for building nuclear weapons.

“There are no free moves for Iran. Everything has a consequence,” US Deputy Energy Secretary Clay Sell told Reuters in an interview. “Their dependence on imported products is a vulnerability.”

The United States is conducting naval exercises in the Gulf, but insisted the moves were not aimed at boosting tensions after Iran captured 15 British sailors and Marines last week.

US crude oil futures shot up to $68 a barrel late Tuesday over concern that the dispute and the seizure of the British personnel could escalate and disrupt oil moving through the Strait of Hormuz, which handles about a third of the world’s sea-borne crude shipments.

Iran is the second largest oil producer in the Organization of Petroleum Exporting Countries but does not have enough refining capacity to meet its domestic gasoline demand. It imports about 40 percent of its requirements, and has been an importer since 1982.

Iran imported 150,000 barrels per day of gasoline in 2005, versus total consumption of 400,000 bpd, making it the second biggest gasoline importer after the United States, according to the US Energy Information Administration.

Analysts have pointed to Iran’s gasoline imports as a possible point of vulnerability, if the West chose to pursue sanctions.

The UN Security Council voted unanimously on Saturday to impose new sanctions targeting Tehran’s arms exports, but has not targeted energy supplies.

So far, there has been no disruption to Iran’s daily oil shipments of around 2.2 million barrels.

Sell said he was “concerned” about the possibility of a disruption of shipments though the Strait.

“It’s a legitimate interest. There are a half a dozen real pinch points around the world from an oil market standpoint,” he said.

Sell said the US strategic oil stockpile was an “insurance policy” against supply disruptions, but he would not say whether the government would tap it in the event of a Iranian disruption.

Sell also declined to say whether US officials have discussed Iranian outage scenarios with Saudi Arabia the world’s top oil producer and the de facto leader of OPEC.

Sell will travel to the Middle East early next month and meet with senior-level officials in Saudi Arabia, an Energy Department spokesman said. The spokesman declined to say whether Sell will meet with Ali al-Naimi, the kingdom’s oil minister.

The trip could also include Kuwait, the United Arab Emirates and Qatar, though details were not firm, he said. reuters

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