Oil prices could go higher if Iran decides to cut oil exports to the EU and would hurt Europe’s economy according to OPEC Secretary General Abdalla Salem El-Badri.
Iran’s parliament is currently debating on a bill which would halt all oil exports to the EU immediately in response to EU sanctions against Iran which plans to ban imports of oil in July. An immediate export ban by Iran could be catastrophic to Europe’s economy as countries who rely heavily on Iranian oil are still in the process of finding alternate sources of oil before summer.
“Iran is exporting 400-500,000 barrels a day to the EU,” El-Badri said in an interview with CNBC. “Of course this quantity is going to affect the EU…you don’t want to add more problems to the EU. And for the Iranians also, to cut 400-500,000 barrels a day from their exports, it will affect their living.”
El-Badri wouldn’t speculate on whether Iran immediately ban oil exports to the EU. “Today…the market is stable, there is no shortage of oil anywhere in the world,” he said. “However, to take out 400-500,000 barrels a day in a matter of days, this will affect the price. Of course the price will go up. I don’t know how much.”
El Badri believes that oil prices can remain around $100 and that global economies can still grow. Anything higher than $110 could be a problem though he said.
If Iran were to close the Strait of Hormuz, oil prices could spiral out of control. The Strait sees about 17 million barrels of oil per day pass through, nearly 20% of global demand. Oil prices could see volatility in the near future depending on what happens with Iran and Europe.