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By Manu Kaushik Tension over Iran's nuclear ambitions, one of the main factors behind the nearly 20 per cent increase in oil prices over the past month, is once again creating turmoil in the global oil market. Iran these days is playing against the charges of deceiving the world about its atomic programme. Iran is the second-largest oil producer within the Organization of Petroleum Exporting Countries (OPEC) and exports roughly 2.5 million barrels per day - 1 million barrels more than current excess production capacity worldwide. It also controls the strategic Strait of Hormuz, a critical shipping lane in the Middle East. Analysts believe that even if Iran pulled a small amount of its oil off the market, say it pulled a half million barrels a day, it could see oil prices literally jumping over the $100 per barrel mark. But other oil analysts say prices would likely not climb much higher than $75 a barrel before strategic reserves would be released and demand would begin to taper off as economic activity slowed around the world. So who would be hurt more? US and other nations say it would be Tehran and argue against succumbing to economic blackmail in any case. United States and European nations are facing the dilemma as they decide whether to act. But Iran would also pay a hefty price if the petro-dollars that now represent 80 percent of export revenues were reduced, potentially stirring civil unrest in a nation with a 14 percent unemployment rate. The US Department of Energy estimates that oil exports finance about half of the Iranian government's budget. And while high oil prices have boosted the annual growth rate to about 5 per cent, Iran has never really recovered from its 1980-1988 war against Iraq and trade restrictions on sensitive technologies. Oil consuming nations, meanwhile, have at least one ace up their sleeves - crude reserves. The United States and other members of the International Energy Agency have a combined 1.48 billion barrels of oil in their emergency stocks. That's equivalent to about 600 days of Iran's net oil exports of 2.4 million barrels per day. OPEC might be able to add 1.5 million barrels per day to world production, mostly from Saudi Arabia. Also, speculation from different quarters are on the roll that Russia might be able to crank up exports by about 5,00,000 barrels once its domestic home-heating demand eases. Influential India, which imports 75 per cent of the crude it consumes, some from Iran, is a wild card in the referral struggle. India joined the U.S., Britain, France and Germany in September to back an IAEA (International Atomic Energy Agency) resolution that set the stage for reporting Iran for violating the Nuclear Non-proliferation Treaty. Meanwhile, Indian government has revised the net oil import bill for 2005-06 to $33.2 billion (Rs 1,48,269 crore), up 21 per cent against its original estimate of $27.4 billion (Rs 11,92,94 crore). The figure is almost 50 per cent higher than the actual net oil import bill of $22.9 billion (Rs 1,03,462 crore) last fiscal. The increase is because of the soaring crude oil prices internationally coupled with lower domestic crude oil production, forcing the industry to go for additional imports of 2.61 million tonne of crude. It's also not clear the United States could win a referral on sanctions at the Security Council, where members Russia and China are Iran's main allies. Both have strong economic and strategic ties to Iran, with China a large oil consumer and drilling partner and Russia a key supplier of arms and nuclear technology and services for what Tehran says is a peaceful programme. Additionally, oil-rich Russia would benefit from higher prices and increased demand for its crude if Iran's oil were off the market.
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