He also said Iran was willing to be flexible about which currencies it used for oil trade following statements it was contemplating the United Arab Emirates’ currency for its European transactions.
“The point is the sanctions are not new. The shape is different. We can carry on,” Iran’s OPEC governor Mohammad Ali Khatibi said in a telephone interview on Wednesday.
The U.S., which suspects Iran of trying to build a nuclear bomb — something it has denied — has signed into law new sanctions that U.S. President Obama said are the toughest yet.
The European Union is also expected to adopt new sanctions on Monday.
Analysts have said the tougher measures would make it even more difficult for Iran to develop its dilapidated oil industry and to import refined products to make up for the country’s lack of refining capacity.
Khatibi said Iran could cope.
“Still we are developing projects and we can expand our gas industry, refining, petrochemicals industry,” he said.
“We can change our industry to produce more gasoline. We are constructing some refineries.”
Iran is also planning to reduce government fuel subsidies, which will drive up the cost and reduce domestic demand.
“We are going to adjust our local prices, not only for gasoline but for other fuels,” said Khatibi.
“I am sure when the price is adjusted from very low levels to international levels consumption will reduce significantly.”
The subsidy reduction would be implemented gradually, but is a risk for Iranian President Mahmoud Ahmadinejad as it could stoke inflation and social unrest.
Khatibi said Iranians would understand and the reduction of subsidies, in line with fuel-conserving initiatives across the world, was positive.
“People understand this limitation is because we are engaging with something like war. There are some difficulties I know, but everybody understands that there is some difficulty,” he said.
“We have planned to change and we are using this as an opportunity.”
Iran’s adaption to successive waves of sanctions has included a shift to euros, rather than dollars for some of its oil trade.
Now the new European measures raise the possibility banks could block euro transactions with Iran, an Iranian official said on Sunday Iran could seek payment in UAE dirhams instead for European customers.
Khatibi said it was up to the Iranian central bank to comment, but what he could say was that Iran was flexible.
“I can say that we are flexible if we feel that the euro is good, also the dollar, also the dirham, the yuan, the yen. We’re flexible,” he said.
An official from the central bank told Reuters, the change of currency was not an issue for it either.
“This is an issue between the Iranian exporters and importers,” he said.
“Right now we have no problems accepting euros but in the future this might change because there might be some transaction blocks due to the sanctions and this is an issue that everyone is looking into right now but no decision has been made on what to do.”
Of the members of the Organization of the Petroleum Exporting Countries, Iran is among those considered to have the highest oil price needs to help it meet its escalating costs and the social needs of a large population.
Khatibi did not directly say whether he was comfortable with a U.S. futures price of nearly $78 a barrel on Wednesday, but he saw room for it to rise.
“It depends on the cost of other commodities because, as you know, in the oil industry we have to use some other commodities for equipment. It’s a dynamic issue,” he said.
“From a producer point of view, in some areas production costs are very high.”
He cited the BP deepwater spill in the U.S. Gulf as a driver of costs, with knock-on effects for the price.
“Deepwater might be tougher than before. I think there is room for some price improvement,” he said.
This step is expected to create around 12,000 jobs annually for UAE nationals in 2024 and 2025
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This additional voluntary cut comes to reinforce precautionary efforts made by OPEC+ countries with the aim of supporting the stability of oil markets
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