Oil Prices Up on News of U.S. Embargo Against Iran : Energy: But the experts see minimal long-term impact on the market or U.S. firms that do business with Tehran.

Oil prices hit a nine-month high Monday in the wake of President Clinton’s announcement of a trade ban with Iran, but experts anticipate little long-term impact on oil markets or for the relatively small group of U.S. companies that still do business with Iran.

Clinton’s plan to ban all U.S. investment in and trade with Iran carries a tough message to the Tehran regime, but it probably will disrupt oil and other markets for only a short time, analysts said.

American consumers should see little or no change in prices at the gas pump because of the embargo, which was prompted by growing U.S. concern about Iran’s support of terrorism and its efforts to further its nuclear programs.

But it was enough to send the price of crude oil futures soaring Monday, with crude for June delivery on the New York Mercantile Exchange trading as high as $20.80 a barrel, the highest level since August. June crude closed at $20.50 a barrel, up 12 cents.

Prices of refined products also increased. June unleaded gasoline rose 0.76 cent to 64.15 cents a gallon, while June heating oil rose 0.30 cent to 51.09 cents a gallon on the New York Merc.

“What does this all mean? Not very much,” said Jim Placke, director of Middle East research for Cambridge Energy Research Associates, a consulting firm. “Iran is not going to find it difficult to sell its crude oil, nor will it have to discount it heavily.”

What’s more, the United States and Iran are “very minor trading partners” in other goods, which will probably be diverted to other markets, he said. U.S. companies sold $326 million in goods and services to Iran last year, down from $616 million in 1993 and $750 million in 1992, according to the Commerce Department.

American oil companies are not allowed to import Iranian oil directly into the United States, a restriction that dates back to the 1979 Iranian revolution. But foreign subsidiaries of U.S. companies last year bought and resold overseas about $4 billion worth of Iranian oil, or more than 600,000 barrels a day.

That level had dropped to about 369,000 barrels a day in March as oil companies anticipated Clinton’s order.

In March, the Clinton Administration blocked a $1-billion oil-exploration deal between Conoco and Iran.

The big U.S. companies that do the most business with Iran--Exxon, Mobil and a Chevron-Texaco joint venture known as CalTex--declined to speculate about how the executive order will affect them.

“We don’t have any long-term commitments to buy crude from Iran,” said Exxon spokesman Ed Burwell. Most months, he said, find the Irving, Tex.-based oil company buying between 200,000 and 300,000 barrels a day from Iran, depending on the needs of its overseas refineries. “We will comply with President Clinton’s executive order, when it’s issued, on trade with Iran.”

Cheryl J. Trench, executive vice president of the Petroleum Industry Research Foundation, said U.S. companies will feel the embargo--perhaps more than Iran--unless U.S. trading partners join in.

“Iranian crude is not so special that it can’t be replaced,” Trench said. “But any time that you say that a particular entity can purchase from fewer sellers than his competitors, then he is competitively disadvantaged at the margin.”

The key question is whether Washington can persuade its Western allies to join the action. “Ultimately, embargoes are not effective against their targets unless they are multilateral,” Trench said. “It won’t affect exports from Iran.”

U.S. exporters of products and services to Iran may feel a short-term pinch on profitability, according to Placke. Agricultural products made up the bulk of last year’s exports to Iran, with soybean oil accounting for $44 million, fertilizers $31.6 million, rice $18.1 million and corn $17.9 million.

Generally, $100 million in exports represents 1,000 American jobs, Placke said.

For U.S. growers, the Iranian numbers represent just a fraction of overall exports, said John Skorburg, a spokesman for the American Farm Bureau, an agricultural association. In soybeans, for example, “Iran doesn’t even make the list of the Top 10 markets,” he said.

In California, the effect will be even smaller, said John Krauter of the California Farm Bureau. Agricultural exports from California to Iran totaled less than $1 million last year, he said.

Equipment manufacturers, whose products make up most of California’s exports to Iran, will not feel a significant impact, either, said Gabe Aguilera, an analyst with the California State Trade and Commerce Agency.

Iran is “not a significant market for California manufacturers,” he said. The state’s exports were $81.2 billion last year, with Iran ranking 54th among the receiving nations, he added.

* ANALYSTS REACT

Some analysts say the sanctions could backfire. A4

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Heating Up

The general contract price of light, sweet crude oil on the New York Mercantile Exchange has climbed steadily in the past year.

Price per barrel:

May 1: $20.50

Source: Bloomberg Business News