OIL PRICES

Iran War 'Could Triple Oil Price'

June 20, 2006
BBC

World oil prices could triple if the West's stand-off over Iran's nuclear programme escalates into conflict, the Saudi Arabian government has warned.

Photo: Conflict with Iran could jeopardize Middle East oil exports

The Saudi ambassador to the US, Prince Turki Al-Faisal, said such an event could send prices spiralling from their current level of about $70 per barrel.

Iran is the Opec cartel's number two oil producer and analysts fear it could halt exports if the dispute worsens.

Tehran is currently examining proposals aimed at ending the diplomatic impasse.

STRAIT OF HORMUZ

"The idea of somebody firing a missile at an installation somewhere will shoot up the price of oil astronomically," Prince Turki told a conference hosted by the United States Energy Association.

He warned that any conflict involving Iran would threaten the Strait of Hormuz, through which most Middle East nations export their oil.

Tankers carry 17 million barrels of oil through the channel every day, according to the International Energy Agency.

US President George W. Bush has refused to rule out a military attack should diplomatic efforts to reach an agreement with Iran fail.

The US Energy Secretary, Sam Bodman, has maintained that the country would be in "good shape" if Iran did put a stop on its oil exports, thanks to America's emergency stockpile of almost 700 million barrels of crude oil.

The threat of a cut in Iranian oil exports has been the main factor driving oil prices higher in recent months, with the price fluctuating either side of $70 per barrel.