TEHRAN (Reuters) – Rising costs for oil projects may threaten new investment in producing countries, Iran’s oil minister said in remarks published on Saturday.
Gholamhossein Nozari also said volatility in oil prices, which have swung above and below $100 a barrel this month, was partly due to the instability of the U.S. dollar.
“The oil market is currently in turmoil and part of this stems from the jump in the value of the dollar to euro, or the sudden drop in the value of the dollar to the euro,” Nozari was quoted as saying by Iran’s Fars News Agency.
The minister suggested international tensions may also be creating instability, alluding to the row between the United States and Russia over Georgia and other issues.
“Perhaps the cold war that began in the international arena is not without effect on the oil market,” he said.
The minister of the world’s fourth largest oil producer said in the past year-and-a-half costs for engineering, consultancy and contracting had climbed 2.5 times.
“If those costs rise to a level where oil production is damaged, the supply of energy in the future will certainly face problems,” Nozari said.
“Crude oil in the international oil market should reach a level so that it would be stable and pave the way for investment by states owning reserves,” he said, but did not give a figure.
Analysts say Iran’s plans to expand output, now running at more than 4 million barrels per day, are hindered by U.S. and U.N. sanctions over Tehran’s disputed nuclear program that are deterring Western investors in particular.