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Kuwait plans for Iranian oil blockade

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Kuwait plans for Iranian oil blockade

By Andrew England in Abu Dhabi

Published: July 1 2008 01:57 | Last updated: July 1 2008 01:57

Oil-rich Kuwait is drawing up plans to ensure it meets its oil exports if neighbouring Iran closes a sea route that is critical to Gulf oil producers, a senior Kuwaiti official said on Monday.

Saad al-Shuwaib, chief executive of Kuwait Petroleum Corporation, the state oil company, told the Kuwait news agency that “precautionary plans” to export Kuwaiti crude if the Strait of Hormuz was closed were in place, but not yet finalised.

On Saturday, the head of Iran’s Revolutionary Guard was quoted as saying that if Iran was attacked it would impose controls on the Strait of Hormuz, a strategic waterway that connects the Gulf with the Indian Ocean and through which more than a third of the world’s exported oil passes.

A spokesman for the US Fifth Fleet, based in Bahrain, warned on Monday that Iran would not be allowed to close the strait: “They will not close it,’’ said Lieutenant Nate Christensen. “The Strait of Hormuz is vital international waters.’’

Gulf countries, many of which – including Kuwait – host US forces have become increasingly worried about the prospect of a conflict between Iran and the US or Israel. They are also concerned about suspicions Iran is seeking a nuclear military capability, as well as its rising influence in the region.

Tensions increased following a statement by Mohammad-Ali Jafari, the commander of the Revolutionary Guard, which was made after recent Israeli military manoeuvres in the eastern Mediterranean. “Any confrontation between Iran and non-regional countries would surely be extended to oil, which would definitely lead to a huge increase in prices,” Mr Jafari told Iran’s state-owned Jam-e Jam newspaper.

Oil prices surged to a fresh record of $143.54 a barrel on Monday, partly as a result of tensions in the region. Mr Shuwaib told the Kuwait news agency that if “military tensions occurred” it could send prices skyrocketing to $200 per barrel.

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Copyright The Financial Times Limited 2008

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