Oil prices rise on Iran’s threats to cut off Strait of Hormuz
Oil prices climbed 70 cents to $111.14 a barrel on Monday, after Iran issued fresh threats to cut off up to 17m barrels per day of oil supply from world markets by shutting down the Strait of Hormuz.
By Emily Gosden
16 Jan 2012
Iran warned its neighbours in the Gulf states that they should not attempt to make up for the shortfall if an embargo is imposed on its crude oil exports, and reiterated its threat that it could block oil transport on the Strait in response to sanctions.
State-run Iranian news agency Mehr reported that “no country” could cope with the shock of the Strait being closed.
But Saudi Arabia, the world’s biggest oil producer, hit back, playing down the risk of disruption.
Ali al-Naimi, the Saudi oil minister, said his country could raise production by about 2m barrels per day “almost immediately” to make up for a shortfall if sanctions were imposed on Iran’s exports.
“I personally do not believe that the Strait, if it were shut, will be shut for any length of time. The world cannot stand for that,” he told CNN. “I don’t think all these pronouncements are helpful to the international oil market or to the price of oil. It’s really disturbing.”