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Breaking News:

Russia Plans To Boost Crude Oil Exports

Iraq’s Contingency Plan If US-Iran Standoff Blocks Its Oil Exports

Iraq

Iraq is looking to draft contingency plans in case the heightened tension in the Middle East results in some kind of blockade of Iraq’s oil exports through the Persian Gulf—a key lane for almost all of the exports of OPEC’s second-largest oil producer, oil ministry spokesman Assem Jihad told AFP on Monday.

“There is no replacement for the southern port and our other alternatives are limited. It’s a source of anxiety for the global oil market,” Jihad told AFP on Monday.

Tensions in the Gulf and in the Middle East have dramatically risen since Thursday, when two oil tankers were apparently attacked in the Gulf of Oman, just outside the Strait of Hormuz which connects the Persian Gulf with the Gulf of Oman and the open seas. The daily flows of oil through the Strait of Hormuz account for around 30 percent of all seaborne-traded crude oil and other liquids. 

Iran’s Foreign Minister Mohammad Javad Zarif tweeted early on Thursday that “Suspicious doesn’t begin to describe what likely transpired this morning,” referring to the attacks, while the United States directly blamed Iran for the attacks.

The Persian Gulf and then the Strait of Hormuz, which Iran has repeatedly threatened to block, are the key export routes of more than 3 million bpd of Iraqi crude oil from its southern ports lying on the Persian Gulf. According to officials who spoke to Reuters last month, Iraq’s exports from the Gulf ports averaged 3.454 million bpd in May.

Cutting off Iraq’s crude oil exports would be disastrous for the country, which relies very much on oil revenues for its budget income, so the Persian Gulf and the Strait of Hormuz are the lifelines of Iraqi state revenues, industry analyst Ruba Husari told AFP.

If Iran tried and closed the Strait of Hormuz, “it’s not going to be closed for long,” U.S. President Donald Trump told Fox & Friends in an interview on Friday, in which he also directly blamed Iran for Thursday’s attacks on the tankers in the Gulf of Oman.

“We’re going to guarantee freedom of navigation throughout the straits,” U.S. Secretary of State Mike Pompeo said on Sunday.

Iran said on Monday that the Chief of Staff of the Iranian Armed Forces, Major General Mohammad Hossein Baqeri, “said his country is strong enough to act in broad daylight if it intends to stop the flow of oil exports from the Persian Gulf, rejecting accusations about Iran's involvement in the recent sabotage attacks on 2 oil tankers in the Sea of Oman.”

“He added that the Iranian Armed Forces are at present monitoring the enemies' moves wisely, precisely and round the clock and will give a crushing and open response to any enemy move and in a very broad region,” Iran’s Fars news agency reports.

By Tsvetana Paraskova for Oilprice.com

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