Sanctions on Iran, Libya could affect oil prices

Sanctions on Iran, Libya could affect oil prices

JAKARTA (JP): Minister of Mines and Energy I.B. Sudjana
predicted yesterday that crude oil prices could increase slightly
as a result of the new U.S. law threatening sanctions against
foreign companies investing in Iran and Libya.

"But actually, it depends on whether the oil importing
countries heed the U.S. decision," Sudjana told the press at the
Bina Graha presidential office yesterday.

U.S. President Bill Clinton signed a bill on Monday
threatening to penalize non-U.S. companies that invest more than
US$40 million annually in the Iranian and Libyan oil and gas
industries.

The Clinton administration issued the sanctions after it held
Iran and Libya responsible for a number of international
terrorism incidents which have particularly harmed the interests
of the United States.

"The problem for the oil importers will be where to get crude
oil outside Iran and Libya," Sudjana said, adding that the
sanctions will put European countries in a difficult position.

Under the quota scheme of the Organization of Petroleum
Exporting Countries (OPEC), Iran has a production quota of 3.6
million barrels per day (bpd) and Libya 1.39 million bpd. OPEC
set its total quota -- including a ceiling for Iraq -- at 25
million bpd.

Iraq, which has clinched an oil-for-food deal with the United
Nations, will have a quota of 800,000 bpd from OPEC.

The Clinton administration's decision has drawn criticism many
countries worldwide.

European Union Trade Commissioner Sir Leon Brittan stated that
all members of the European Union will maintain their rights and
interests if the U.S. law harms their economies.

In Bonn, German foreign minister Klaus Kinkel told state radio
that the U.S. law contradicts the basis of the World Trade
Organization and the Organization for Economic Cooperation and
Development. "We have clearly said we will not accept them."

Switzerland and the Netherlands also vented anger at the U.S.
move, while Australia, Russia and Japan threw their weight behind
the European move to protest the new U.S. antiterrorism
sanctions.

Iranian officials praised the European stand against the law
and said that the sanctions were doomed to fail and would lead to
the isolation of the United States. (13)