- The Washington Times - Monday, January 23, 2006

GENEVA — The price of crude oil could reach $131 a barrel if Iran stopped production amid the standoff over Tehran’s decision to resume uranium enrichment, a global market study predicts.

Oil prices topped $69 a barrel yesterday on supply fears over the nuclear standoff.

Iran supplies about 4 million barrels a day, or 5 percent of the world’s oil supply, said William F. Browder, chief executive officer of Moscow-based Hermitage Capital Management.

The former Wall Street investment banker said the market-scenario study — based on an analysis that factored in seven supply shocks in the past 35 years — had an 81 percent accuracy in predicting the price.

According to the U.S. Energy Information Administration, Iran relies heavily on oil exports for foreign-exchange revenue and government budget. Oil exports account for 80 percent to 90 percent of export revenue and 40 percent to 50 percent of the nation’s budget.

The agency estimates that Iranian oil export revenues last year increased by 45 percent to $46.6 billion and are projected to edge to $50.1 billion this year.

However, oil market analysts and international security specialists tracking the escalation in the crisis between Iran and Western powers downplayed the prospects of the United Nations slapping sanctions on the country or of Iran opting to cut off oil exports in retaliation anytime soon.

An official with the Paris-based International Energy Agency, which includes the United States, stressed that its member countries are holding “well above” the average amount of 90 days’ supply of oil import demand.

The agency released stocks after Hurricane Katrina temporarily crippled U.S. oil refinery production capacity and supply flow.

The analysts said that the tensions in Iran and in other volatile geopolitical spots such as Venezuela, Iraq and Nigeria already are factored in the market and that the price is unlikely to hit new highs but would oscillate by about $10.

Some Western security analysts see the buildup in tensions as “more a war of words” and expect it to stay at that level until the meeting of the governing board of the International Atomic Energy Agency (IAEA), the global nuclear watchdog, in Vienna, Austria, on Feb. 2.

Yesterday, in a setback for efforts by the U.S. and the European Union, the IAEA chief ruled out advancing a wide-ranging report on the issue in time for the Feb. 2 meeting.

Replying to U.S., EU and Australian letters, Mohamed ElBaradei said he had given Iran until the regularly scheduled March 6 session to answer questions in IAEA inquiries into the country’s nuclear project.

Iran upped the ante in the standoff yesterday, when its senior envoy to IAEA, Ali Asghar Soltaniyeh, warned that Tehran will begin developing a full-scale uranium enrichment program immediately if it is referred to the U.N. Security Council.

President Bush expressed concern.

“The world cannot be put in a position where we can be blackmailed by a nuclear weapon,” he said at Kansas State University.

• This article is based in part on wire service reports.

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