The prediction doesn’t have too much resonance given that prices have been falling for 10 weeks and are now back to the range they were in last year before all the talk of new sanctions on Iran.
The White House, however, has been very concerned about oil prices surging in the fall just before the November elections, endangering President Obama’s chances of re-election.
So, Obama last week got the G-8 leaders to issue a statement advocating that oil stored by the major powers for use in an emergency be released to the market to drive down prices should they surge again.
A number of Republicans have criticized that idea, arguing the stocks are for use only when supplies are constrained by an emergency, such as when Hurricane Katrina halted most production in the Gulf of Mexico. Cynics note that the Republicans stand to benefit from oil prices rising before the fall elections.
Oil Minister Rostam Qasemi criticized the new European and American sanctions due to take effect in a few weeks, but he insisted they didn’t hurt Iran. “Despite the sanctions, the development of the oil industry has not been stopped,” he said. “Iran, without a doubt, will be the winner in this economic war with the West.”
Speaking at congregational prayers in Tehran Friday, he said the EU sanctions had already driven up oil prices. He said this the day after an average OPEC barrel sold for $103.49, down from a high of $124.59 ten weeks earlier.
In the preceding days, other Iranian officials even gave a price, saying an OPEC barrel would go for $160 a barrel if the new sanctions were really imposed.
The oil price soared from January to March on fears of the impact of the sanctions, but the OPEC price fall has generally been attributed to a growing assumption that a cut off of Iranian supplies will not be horrific for the market.
The day after Qasemi spoke, the G-8 leaders meeting at Camp David issued a statement that said: “Looking ahead to the likelihood of further disruptions in oil sales and the expected increased demand over the coming months, we are monitoring the situation closely and stand ready to call upon the International Energy Agency to take appropriate action to ensure that the market is fully and timely supplied.” It is the IEA that decides when and how much oil countries are to release from their emergency stocks.
The G-8 states are Japan, Canada, Britain, France, Germany, Italy, Russia and the United States.
