Eni CEO: Oil markets do not expect closure of the Hormuz Strait

Eni's CEO, Eni of Italy, said that oil markets were signaling an unlikely escalation of tensions between Israel and Iran or the closing of the Strait of Hormuz.

The Strait of Oman, located between Oman and Iran, connects the Gulf of Oman in the north with the Gulf of Oman in the south. It also links the Arabian Sea to the east.

Claudio Descalzi, Eni, said at an energy conference that the markets had not yet pushed crude oil prices above $80 or $90 per barrel, (signaling that) they were predicting more extreme scenarios, such as the closing of the Strait of Hormuz.

Israel began its operation against Iran in June 2013, claiming to have targeted ballistic missile factories, nuclear facilities and military commanders as part of an effort to stop Tehran from developing an atomic bomb.

Iran has threatened in the past to close down the Strait of Hormuz as a retaliation for Western pressure.

Descalzi stated that the first impact of a possible closure would be on Iran's oil exports and it would likely involve U.S. involvement.

Descalzi stated that "all things that I believe the world leaders will do their best to avoid, even though we're in a very volatile situation."

Brent crude futures were hovering at $76.6 per barrel as of 1225 GMT, after an increase of 4% the previous session.

Eni's CEO stated that the state-controlled company has been developing new ventures, including biofuels and renewable energy businesses, to reduce its oil exposure.

Descalzi, a reporter at the time, said that the group will likely generate 2 billion euro ($2.3 billion) by selling a 20% stake of its renewable unit Plenitude.

Eni announced in May that it had begun exclusive negotiations with the investment firm Ares Alternative Credit Management regarding the sale of 20% of Plenitude. Reporting by Francesca Landini. Jane Merriman edited the article.

(source: Reuters)