Reuters: Kuwait is developing precautionary plans to ensure oil exports in case Iran closes a vital oil route in the world's largest oil exporting region, a top oil official told state news agency KUNA on Monday.
By Ulf Laessing and Rania El Gamal
KUWAIT, June 30 (Reuters) – Kuwait is developing precautionary plans to ensure oil exports in case Iran closes a vital oil route in the world's largest oil exporting region, a top oil official told state news agency KUNA on Monday.
"There are precautionary plans to export Kuwaiti crude in cooperation with Gulf Cooperation Council (GCC) countries but those plans are not finalised yet," KUNA quoted Saad al-Shuwaib, head of state oil company Kuwait Petroleum Corp (KPC) as saying.
Tehran would impose controls on shipping in the Gulf and Strait of Hormuz if Iran was attacked, the head of Iran's Revolutionary Guards said in remarks published on Saturday.
Oil hit a new record of $143.54 a barrel on Monday on rising tension between Iran and Israel over Tehran's nuclear programme which the United States and the Jewish state say is meant to build an atomic bomb. Iran says the programme is peaceful.
"If any military tensions occurred oil prices will reach $200 (per barrel)," said Shuwaib.
Shuwaib, whose country is one of the six Gulf Arab nations that comprise the GCC loose political and economic alliance, did not give details of the plans.
Oil flows through the Strait of Hormuz, a narrow waterway at the mouth of the Gulf separating Iran from the Arabian Peninsula, accounts for about 40 percent of the world's traded oil supply.
Speculation about a possible attack on Iran has risen since a report this month said Israel had practiced such a strike, prompting tough talk of retaliation, if pushed, from Tehran.
Any military action in the Strait of Hormuz would knock out oil exports from OPEC's biggest producers, cut off the oil supply to Japan and South Korea and hit the booming economies of Gulf states.
Kamel al-Harami, an independent Kuwaiti oil analyst, said it would be very difficult to ensure exports flow from Kuwait, the world's seventh-largest oil exporter, if Iran took such action.
"There are limited Saudi pipelines to the Red Sea," he said, adding that Saudi Arabia was likely to give priority to own oil.
Saudi Arabia, the world's largest oil exporter, ships around a quarter of its oil exports through a Red Sea terminal, according to the U.S. Department of Energy, but does not operate any major functioning international pipelines.
Ali al-Baghli, a Kuwaiti former oil minister, said his country would probably use the same offshore facility near Oman it used during the 1980-1988 Iran-Iraq war when merchant shipping in the Gulf came under attack.
"Kuwait dealt with it during the Iran-Iraq war… It would be a major crisis… (but) certainly it will be dealt with," said Baghli. (Additional reporting by Souhail Karam in Riyadh; editing by James Jukwey)
