Ban on Iran oil inflates prices

Oil prices surged after President Clinton's weekend announcement that the United States would extend its ban on Iranian oil to cover trading outside the US.

The news came as Mobil announced 4,000 job losses from its worldwide workforce in a cost-cutting drive to save hundreds of millions of dollars.

The price of Brent futures rose to about $19.40 per barrel at one point yesterday, compared with an average of less than $17 in the first quarter of the year, although City analysts said it is not clear whether the increase would be sustained.

The US has had a ban on Iranian oil since 1987, but companies have been able to trade through their operations overseas. US firms buy about $4bn worth of Iranian crude a year - accounting for one quarter of the amount exported - although sales have been dropping back as companies anticipated an extension on the embargo.

Groups to be hit include Exxon, Mobil, Texaco and Chevron. Industry sources said the US oilfield services sector would lose out to European rivals not constrained by the embargo and that jobs would go.

It remains unclear, however, whether there will be any impact on big European companies such as Shell and British Petroleum, which have significant activities in North America. There is some political support in the US for banning the trading activities of any firm which deals with Iran, even if they are domiciled overseas. President Clinton is believed, however, to be against extending such controls to foreign-owned companies.

A spokesman for BP said the company could not comment until the detail of President Clinton's plan had been analysed. Shell International said: "It is a political matter and not one we have a view on."

Iran produces 3.5 million barrels a day, of which 2.5 million are exported. Analysts said other countries are unlikely to join the ban. There is also a view that the US oil firms will be able to find alternative sources of crude in the Middle East and Russia.

Philip Morgan of Paribas Capital Markets said: "There is a lot of nervousness and uncertainty. The price has gone up, but the fundamentals suggest it could come down again quite sharply. Other analysts also said it was too early to assess the implications of the US clampdown.

The oil debacle coincided with Mobil's announcement of job cuts. It will shed 4,000 jobs from its worldwide workforce of 51,000. The move, which targets support staff, will save the group $750m a year. Mobil said it expects to take a $300m after-tax charge in the second quarter of the year.

About 850 of the jobs will be lost in Europe, but the impact, if any, on the UK is not yet known. Mobil will phase out its research and engineering centre at Princeton, New Jersey, and will move the activities to similar facilities elsewhere.

Start your day with The Independent, sign up for daily news emails
ebooks
ebooksAn introduction to the ground rules of British democracy
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
SPONSORED FEATURES
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Collections Agent

£14000 - £16000 per annum: Recruitment Genius: This company was established in...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE 40k: SThree: SThree are a global FTSE 250 busi...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + competitive: SThree: SThree are a global FTSE 250 ...

Recruitment Genius: Mortgage Administrator

£20000 - £25000 per annum: Recruitment Genius: We are a vibrant and establishe...

Day In a Page

Migrant crisis: UN official Philippe Douste-Blazy reveals the harrowing sights he encountered among refugees arriving on Lampedusa

‘Can we really just turn away?’

Dead bodies, men drowning, women miscarrying – a senior UN figure on the horrors he has witnessed among migrants arriving on Lampedusa, and urges politicians not to underestimate our caring nature
Nine of Syria and Iraq's 10 world heritage sites are in danger as Isis ravages centuries of history

Nine of Syria and Iraq's 10 world heritage sites are in danger...

... and not just because of Isis vandalism
Girl on a Plane: An exclusive extract of the novelisation inspired by the 1970 Palestinian fighters hijack

Girl on a Plane

An exclusive extract of the novelisation inspired by the 1970 Palestinian fighters hijack
Why Frederick Forsyth's spying days could spell disaster for today's journalists

Why Frederick Forsyth's spying days could spell disaster for today's journalists

The author of 'The Day of the Jackal' has revealed he spied for MI6 while a foreign correspondent
Markus Persson: If being that rich is so bad, why not just give it all away?

That's a bit rich

The billionaire inventor of computer game Minecraft says he is bored, lonely and isolated by his vast wealth. If it’s that bad, says Simon Kelner, why not just give it all away?
Euro 2016: Chris Coleman on course to end half a century of hurt for Wales

Coleman on course to end half a century of hurt for Wales

Wales last qualified for major tournament in 1958 but after several near misses the current crop can book place at Euro 2016 and end all the indifference
Rugby World Cup 2015: The tournament's forgotten XV

Forgotten XV of the rugby World Cup

Now the squads are out, Chris Hewett picks a side of stars who missed the cut
A groundbreaking study of 'Britain's Atlantis' long buried at the bottom of the North Sea could revolutionise how we see our prehistoric past

Britain's Atlantis

Scientific study beneath North Sea could revolutionise how we see the past
The Queen has 'done and said nothing that anybody will remember,' says Starkey

The Queen has 'done and said nothing that anybody will remember'

David Starkey's assessment
Oliver Sacks said his life has been 'an enormous privilege and adventure'

'An enormous privilege and adventure'

Oliver Sacks writing about his life
'Gibraltar is British, and it is going to stay British forever'

'Gibraltar is British, and it is going to stay British forever'

The Rock's Chief Minister hits back at Spanish government's 'lies'
Britain is still addicted to 'dirty coal'

Britain still addicted to 'dirty' coal

Biggest energy suppliers are more dependent on fossil fuel than a decade ago
Orthorexia nervosa: How becoming obsessed with healthy eating can lead to malnutrition

Orthorexia nervosa

How becoming obsessed with healthy eating can lead to malnutrition
Lady Chatterley is not obscene, says TV director

Lady Chatterley’s Lover

Director Jed Mercurio on why DH Lawrence's novel 'is not an obscene story'
Farmers in tropical forests are training ants to kill off bigger pests

Set a pest to catch a pest

Farmers in tropical forests are training ants to kill off bigger pests