WASHINGTON – Consumers wouldn't suffer undue hardships in the event Iran disrupts Persian Gulf oil supplies because the Bush administration has a plan "if push were to come to shove," a Cabinet officer said Tuesday.
Energy Secretary Samuel Bodman told reporters that in such a scenario, the government would tap its emergency oil reserve. He said he doesn't anticipate an oil supply disruption and said he was speaking hypothetically.
As to any sharp reduction of Iran oil or a disruption in the supply line, Bodman said, "We certainly can handle it for a while. ... There is the Strategic Petroleum Reserve and we have other approaches."
Iran's supreme leader, Ayatollah Ali Khamenei, said last weekend that if his country is punished because of its nuclear program, Tehran is prepared to disrupt the world's oil supply, including production cuts.
Khamenei said the United States and its allies would be unable to secure oil shipments passing out of the Persian Gulf through the strategic Strait of Hormuz to the Indian Ocean.
Other Iranian officials repeatedly have ruled out using oil as a weapon, and Secretary of State Condoleezza Rice downplayed the Iranian oil threat because oil revenues are extremely important to the country.
Nevertheless Khamenei's remarks propelled oil prices to $73 a barrel on Monday. Iran is the world's fourth-largest oil exporter and the second-largest producer in the Organization of Petroleum Exporting Countries.
Oil prices receded Tuesday as crude supplies remain adequate. Light, sweet crude for July delivery on the New York Mercantile Exchange fell 11 cents to $72.49 a barrel.
Bodman, meeting with reporters after a speech at an electricity forum, suggested that there seems to be plenty of oil available.
He said Saudi Oil Minister Ali al-Naimi told him that Saudi Arabia recently cut back production by 100,000 barrel a day "because he isn't finding customers."
Bodman said he is convinced oil producers want "to keep the market well supplied. It's in their interest as well as the interest of consumers."
Oil industry analysts also have said the market remains well-supplied and that there are signs global demand growth is weakening.
"What I've been hearing from traders is that there is oil available in the market that is not being bought," said Ann-Louise Huttle, head oil analyst for Wood Mackenzie.
However, she said, concerns about possible disruptions to the flow of oil around the world is keeping prices high and volatile.