Iraq Wednesday urged Iran not to close the strategic Strait of Hormuz, where most oil exports from the Gulf to the West pass, arguing that exporters have an interest in a stable world economy. Iran is threatening to shut down the strait over stepped-up Western sanctions on its nuclear program, but such a step would also hit Iraq hard.

Iraqi Oil Minister Abdul-Karim Elaibi, who is also the rotating president of OPEC, said he will travel to Iran Thursday to urge Iran “to issue real and important assurances to the world that everybody is keen to protect the waterways, production and oil exports from the region.”

Iran has threatened to close the waterway if the West tries to stop Iranian oil exports as a sanction against its nuclear development program. The U.S. has passed a law banning business with Iran’s central bank, which would make it difficult for customers to pay for Iranian oil. The ban goes into effect later this year, and other nations are considering whether to abide by it as well.

The West believes Iran is trying to build nuclear weapons and has enacted several rounds of sanctions to try to persuade Iran to rein in its program. Iran insists its nuclear development program is for peaceful purposes.

Oil exports account for 80 percent of Iran’s foreign currency earnings, and its threats indicate that it is troubled by the prospect of new sanctions.

Iraq’s exports traverse the Strait of Hormuz, and closing it would cripple the Iraqi economy. Oil export revenues make up 95 percent of Iraq’s foreign currency income.

Elaibi rejected the idea of using control over oil exports as a weapon.

“We at OPEC are keen on the stability of production and prices which is a guarantee to the stability of the global economy,” he told reporters. “We are not in favor of using oil in politics.”

Elaibi also said that Iraq will inaugurate a new oil export outlet in the Gulf by the end of this month, with a capacity of up to 900,000 barrels a day. It would be the first of five floating facilities that would eventually handle about 5 million barrels a day.

The new outlet will help Iraq, limited now by infrastructure bottlenecks, to export more oil.

Although Iraq sits atop the world’s fourth largest proven reserves of conventional crude, about 143.1 billion barrels, decades of sanctions, war, sabotage and neglect have battered the sector.

Since 2008, Iraq has awarded 15 oil and gas deals to international energy companies, the first major investments in the country’s energy industry in more than three decades.

Baghdad aims to raise daily output to 12 million barrels by 2017, a level that would put it nearly on par with Saudi Arabia’s current production capacity. Many analysts say that target is unrealistic.

Source: dailystar.com.lb