IRAN AND WORLD OIL SUPPLY TUESDAY, FEBRUARY 27, 1979 U.S. SENATE, COMMITTEE ON ENERGY AND NATURAL RESOURCES, Washington, D.C. The committee met, pursuant to notice, at 9:30 a.m., in room 3110 Dirksen Office Building, Hon. Henry M. Jackson, chairman, presiding. Present: Senators Jackson, Bumpers, Durkin, Metzenbaum, Tsongas, Bradley, Hatfield, Domenici, Stevens, and Bellmon. Also present: George Dowd, counsel. OPENING STATEMENT OF HON. HENRY M. JACKSON, A U.S. SENATOR FROM THE STATE OF WASHINGTON The CHAIRMAN. The committee will come to order. This morning, the committee will begin an effort to identify the present and future impacts of the current crude oil supply shortfall caused by the continued curtailment of Iranian crude oil production. Even though the new revolutionary government in Iran has announced that it will soon resume oil exports, there are many uncertainties surrounding the prospect. When will the exports begin? How much oil will be available for export and to whom and for how long? Will existing contracts be honored or abrogated? What price will be demanded? Although about half of the Iranian shortfall has thus far been cushioned by production increases authorized by other producing nations, such as Saudi Arabia, Kuwait, and Iraq, a serious question remains concerning whether such extra oil will continue to be available, especially in the event that some Iranian oil again becomes a commodity on the world market. The other impacts of the Iranian oil interruption have been handled by a drawdown of petroleum stocks in the United States and other nations which are members of the International Energy Program. Walking hand in hand with the precarious nature of the free world's oil supply situation is the further specter of ever-increasing price increases. The unprecedented prices for oil now being paid in the spot market are threatening the industrialized oil-consuming nations with additional jumps in the OPEC price formulas. If the disappearance of spare production results in an overall price. hike on top of the increases announced by OPEC for 1979, the possibility of a world recession will become a reality. |