Oil Prices Could Reach $500 Per Barrel in Few Years If US Dollar Falls Further and US-Israeli Threats to Iran Intensifies

Iran: Oil could Reach $500 on Dollar, Politics

July 26, 2008, TEHRAN (FNA)-

Iran's OPEC governor said world oil prices could reach as high as $500 per barrel in a few years' time if the US dollar falls further and political tension worsens.

"If the dollar's value continues to decrease and if the political crisis becomes worse, the oil price would reach up to $500," Mohammad Ali Khatibi told Shahrvand-e Emrooz in an interview published on Saturday.

He was asked about predictions that oil prices could reach up to $200 per barrel in the next two or three years.

Oil dropped $2 to a fresh seven-week low on Friday, extending a decline that has knocked more than $24 off crude in two weeks as high fuel prices continue to batter demand.

Crude prices reached an all-time peak of $147 earlier this month.

Khatibi also said oil exports from the whole Middle East region would be at risk if Iran came under any military attack over its nuclear program.

"If there is another war in the region, it will not only be Iran's oil not reaching the market, but rather the oil of the whole region would be cut from the market," Khatibi said.

"In that case, we will not have a price rise. We will have a price explosion."

Around 40 percent of global oil shipments leave the Persian Gulf through the Strait of Hormuz off Iran's southern coast and Tehran has threatened to impose controls on shipping there if it is attacked, and warned Persian Gulf neighbors of reprisals if they took part.

The United States and Iran are at loggerheads over Tehran's progress in civilian nuclear technology.

The United States and its staunch ally Israel accuse Iran of seeking a nuclear weapon, while they have never presented any corroborative document to substantiate their allegations. Iran vehemently denies the charges, insisting that its nuclear program is for peaceful purposes only.

Tehran stresses that the country has always pursued a civilian path to provide power to the growing number of Iranian population, whose fossil fuel would eventually run dry.

Iran is under three rounds of UN Security Council sanctions for turning down West's illegitimate calls to give up its right of uranium enrichment, saying the demand is politically tainted and illogical.

Iran insists that it would continue enriching uranium because it needs to provide fuel to a 300-megawatt light-water reactor it is building in the southwestern town of Darkhoveyn as well as its first nuclear power plant in the southern port city of Bushehr.

Iran has repeatedly said that it considers its nuclear case closed after it answered the UN agency's questions about the history of its nuclear program.

Washington alleges it wants a diplomatic solution to the row, but has not ruled out military action if that were to fail.

Both Washington and Tel Aviv have recently intensified threats against the Islamic Republic.

Speculation that Israel could bomb Iran has mounted since a big Israeli air drill last month.

In the first week of June, 100 Israeli F-16 and F-15 fighters reportedly took part in an exercise over the eastern Mediterranean and Greece, which was interpreted as a dress rehearsal for a possible attack on Iran's nuclear facilities.

Tehran has vowed to strike back at Israel as well as US interests and military bases and shipping if it came under attack.

Tel Aviv and Washington's intensified threats to launch military action against Iran are in direct opposition to a recent report by 16 US intelligence bodies which endorsed the civilian nature of Iran's nuclear plans and activities.

Following the US National Intelligence Estimate (NIE) and similar reports by the IAEA head - one in November and the other one in February - which praised Iran's truthfulness about key aspects of its past nuclear activities and announced settlement of outstanding issues with Tehran, any effort to impose further sanctions or launch military attack on Iran seems to be completely irrational.

The February report by the UN nuclear watchdog, the International Atomic Energy Agency, praised Iran's cooperation in clearing up all of the past questions over its nuclear program, vindicating Iran's nuclear program and leaving no justification for any new UN sanctions.

Following the said reports by the US and international bodies, many world states have called the UN Security Council pressure against Tehran unjustified, demanding that Iran's case must be normalized and returned from the UNSC to the IAEA.

Political analysts believe that Bush's attempt to rally international pressure against Iran has lost steam due to the growing international vigilance, specially following the latest IAEA and US intelligence reports.

US President George W. Bush finished a tour of the Middle East in winter to gain the consensus of his Arab allies to unite against Iran.

But hosting officials of the regional nations dismissed Bush's allegations, describing Tehran as a good friend of their countries.

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