US senator says Iran oil fears should spur ANWR drilling

Washington

Concerns about the potential impact on Iranian oil supplies of the
current standoff over Tehran's nuclear program should spur US policymakers to
open areas currently off limits to oil and gas exploration, the chairman of
the US Senate's Energy and Natural Resources Committee said Wednesday.

     New Mexico Republican senator Pete Domenici told an audience of energy
specialists in Washington that any disruption of Iranian oil exports could
result in an energy crisis in the US, and that lawmakers should be motivated
to pass legislation approving drilling in the Arctic National Wildlife Refuge
and open portions of the US Outer Continental Shelf which are currently closed
to hydrocarbon development.

    Iran faces being hauled before the UN Security Council over its resumption
earlier this month of sensitive nuclear activities, although the European
Union has said it is not seeking sanctions in the short term.

    Tehran has not explicitly threatened to withhold oil in the event of
sanctions being imposed, although some media and analysts have interpreted as
a veiled threat remarks by hardline President Mahmoud Ahmadinejad suggesting
that Iran has "leverage" and comments in a similar vein by other senior
officials.

    Domenici appeared to discount the likelihood of any embargo on Iranian oil
exports, not least because it would be difficult for other oil producers to
compensate for the loss of Iranian oil. Iran currently pumps close to 4-mil
b/d of crude and exports around 2.5-mil b/d.

    "Its easy to say we're just going to boycott [Iranian oil]...but you've
got to figure out the results and I don't know if the world could accommodate"
the loss of Iran's oil exports, he said.

     US light crude prices climbed above $69/bbl this week on supply
disruptions in Nigeria, a key supplier of light crude to the US, and concerns
about Iran. Prices were back down in the mid-$60s Wednesday, however, as the
US Energy Information Administration announced week-on-week builds in
commercial stocks of refined products.

     The International Atomic Energy Agency, the UN's nuclear watchdog, will
meet Feb 2-3 in Vienna to discuss the Iranian nuclear issue -- two days after
the OPEC oil cartel, of which Iran is a member, meets in the Austrian capital.
Citing projections of lower oil demand in the second quarter, Iran has called
for a 1-mil b/d cut in OPEC production from the beginning of April. The
International Energy Agency, which represents many of the world's major oil
consuming countries, last week forecast a 1.9-mil b/d drop in oil demand in
the second quarter.

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