Dealing with Iran encourages its nuclear plan: US

DOHA (Reuters) – Conducting business with Iran encourages
its nuclear ambitions, said U.S. Energy Secretary Sam Bodman on
Monday when asked for his reaction to a $7 billion gas pipeline
deal between Iran, Pakistan and India.

“Doing business with Iran, it seems to me, at a certain
level encourages this,” he told a news conference, referring to
Iran’s nuclear program.

The oil ministers of Iran, Pakistan and India told Reuters
on Saturday they were very near a final agreement on a planned
gas pipeline to pump Iranian gas to India, in defiance of U.S.
opposition. Iranian Oil Minister Kazem Vaziri said he expected
the final deal to be signed in Tehran in June.

Bodman said he would meet with Indian oil minister Murli
Deora, also attending the International Energy Forum in Doha.

The project to pump Iranian gas to India through Pakistan
was first proposed more than a decade ago, but progress has
been slow because of hostility between India and Pakistan and,
more recently, U.S. opposition to Iran over its nuclear work.

The pipeline would link Iran’s abundant gas reserves, the
world’s second biggest, to India’s booming economy.

Bodman said record oil prices of around $75 were causing
great “dislocation” in the United States and the rest of the
world but there was little producers could do.

“We have encouraged producing nations to keep oil markets
well supplied — I think they’ve done that. I would encourage
them to do more if they can,” he said. “We are in a situation
where supply is roughly equal to demand today.”

OPEC ministers were due to meet in Doha later on Monday.
They are expected to keep their 28 million barrels per day
output limit unchanged because they are already producing as
much oil as refiners can process.

The United States uses a quarter of the world’s oil and
over 40 percent of its gasoline. Bodman appeared to dismiss a
suggestion by the International Monetary Fund that Washington
should up fuel tax, among the world’s lowest, to stem demand.

“There is not a lot of sentiment in Washington to raise
gasoline taxes,” he said.

The United States faces supply disruptions in some states
due to a switch to an ethanol mix in its motor fuel and concern
over shortages have helped push oil prices upwards.

(Reporting by Deepa Babington, Doha newsroom)