Report: OPEC wants to stay out of Iran-West spat

[January 23, 2012]  CAIRO (AP) -- OPEC's acting president said the producer group should stay out of political battles, Iran's official IRNA news agency reported Sunday, an apparent bid by the bloc to steer clear of a potential showdown between Tehran and the U.S. over threats to close the vital Strait of Hormuz.

Iraqi Oil Minister Abdul-Karim Elaibi said that while Iran's "enemies" have imposed various sanctions on the Islamic Republic, the 12-nation Organization of the Petroleum Exporting Countries' main focus should be protecting its members' interest and not being dragged into a political struggle over oil.

Elaibi, who is also OPEC's current president, last week said he was going to Tehran to warn against closing the strait, through which about a sixth of the world's crude flows daily. IRNA did not say whether the tension over the waterway was raised during the oil minister's meetings with officials.

Instead, the language reflected the warmer relations between Iran and Iraq since a U.S.-led coalition had ousted former strongman Saddam Hussein in 2003. The Shiite government in Baghdad is seen as increasingly close to Tehran, and Iran is investing heavily in Iraq.

Iran has warned repeatedly it would choke off the strait if sanctions affect its oil sales. The U.S. has enacted, but not yet put into force, sanctions targeting Iran's central bank and, by extension, the country's ability to be paid for its oil. The European Union, a major buyer of Iranian oil, is considering sanctions on Iranian crude.

The tension over the strait and the potential impact it would have not only on global oil supplies, but also the price of crude and the economies of the countries that buy Iranian oil, have weighed heavily on consumers and traders.

Gulf nations have offered assurances that they would step in and provide any additional crude needed by the global market. Iran interpreted the offer as an attempt to undercut it and issued a quick warning to the Gulf Arab producers to not try to offset its exports with their own.

Elaibi's remarks appear to be an attempt to pull the producer bloc out of the political fray, but they also reflect the uneasy balance Iraq faces.

Iraq exports most of its crude through the strait, and any attempt to shut the waterway could be a severe blow to its economy. At the same time, it appears reluctant to come across as being too harsh on its neighbor, in part because of the investments Iran provides and its ideological weight as the region's strongest Shiite government.

His visit to Tehran came just days before Iraq inaugurates a new oil export outlet in the Gulf 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.

[Associated Press; By TAREK EL-TABLAWY]

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