The former president of Saudi Aramco has brushed off Iran’s threats to close the Strait of Hormuz.
Speaking on the sidelines of a Dubai conference, the ex-chief of the world’s richest company said he did not think closure was likely, and would not be a disaster for oil-producing Gulf countries even if it happened.
“No one will allow the closure,” Abdallah Jum’ah told Arabian Business, “the world will not allow it.”
“Also, Saudi Arabia built a 5m bpd pipeline to the Red Sea a long time ago, so everybody has been working on contingency plans.
“If it gets closed... I don’t think [it would be a disaster].”
Iran first threatened to close the Strait of Hormuz in December 2011, after Washington and the EU said they would ban the Islamic Republic’s oil exports in a bid stifle its nuclear programme.
OPEC’s second biggest oil exporter reiterated its warning earlier this year, after the West went ahead with its toughest sanctions yet on Iran.
The possibility of closure has since sparked panic among the Arabian Gulf’s biggest oil producers, who are reliant on the strait to export their petroleum products.
The narrow sea channel is the main passage to the open ocean for large parts of the region, and used for more than a third of the world's seaborne oil trade.
Talking to Dow Jones reporters earlier this week, Kuwait’s oil minister Hani Hussein said the country had begun looking at back up plans in case Iranian threats became a reality, but declined to give further details.
The UAE is also expected to open a crucial oil pipeline between Fujairah and Abu Dhabi towards the middle of this year, which will allow it to bypass the Strait of Hormuz altogether.
However, Iran’s warnings have continued to contribute to high international oil prices, with Brent crude currently trading at near US$124 a barrel.
Asked about his expectations for oil prices this year, Jum’ah declined to comment, but said the transportation sector would remain heavily reliant on fossil fuels for some time.
“Oil is going to be with us for a long time. All this talk about alternative energy is good, and everybody is working on it, but we have to be realistic.”
He added that oil was far from in decline, with new supplies continually being discovered.
Shale gas, the unconventional natural gas resource, would also be important in the future, he said.
Experts have hinted in recent months that the region could have large deposits of shale gas, which has already revolutionised North America's gas market.
“I think with shale gas we are at the very beginning,” said Jum’ah, “but this is going to be a game-changer in the next two to three decades to come. There is a lot of potential [in the Middle East].”
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