FRANKFURT (dpa-AFX) - BASF CEO Markus Kamieth is warning of a potential new oil price shock resulting from the conflict in Iran. 'In terms of oil, we are gradually reaching the point where reserves are starting to be depleted,' Kamieth told the International Club of Frankfurt Business Journalists (ICFW). Should the Strait of Hormuz not reopen soon, the second half of the year could see 'another price shock for both oil and refined products.'

While the closure of the Strait of Hormuz results in a loss of only 3 percent of global gas supplies, the figure for oil stands at approximately 20 percent. Given the high concentration of refineries in the Middle East, the share for refined products, such as fuels and various chemicals, rises significantly to as much as 40 percent.

The conflict in Iran, which began in late February, has driven global oil prices sharply higher, fueling inflation - a trend felt by motorists at the pump and by companies facing rising transport costs. While oil prices have since stabilized somewhat, they remain near the 100 dollar mark per barrel of Brent crude.

At the same time, Kamieth indicated he was not concerned regarding gas supplies. Although gas prices are rising due to speculation, 'that is not my primary concern,' he noted. One reason is that China, a massive consumer of gas and LNG, switches to coal as soon as gas prices rise. This reduces gas demand in the Far East, thereby easing market pressure.

No return to Russian gas

Kamieth voiced criticism of energy policy. 'Germany and Europe will never be low-cost gas locations because we do not produce our own gas. That is a deliberate choice. As a society, we do not want it. We apparently enjoy being an industrial nation with limited energy.'

Kamieth also dismissed the possibility of returning to cheap Russian gas. 'The idea promoted by some politicians on the right of the spectrum - that reopening Nord Stream would lower gas prices in Europe - is nonsense. It will not work because the price-setting mechanism for gas in Europe remains liquefied natural gas (LNG).'

Worst crisis for chemicals in 25 years

The chemical industry is likely experiencing its most difficult period in 25 years, Kamieth said. Pressure on energy-intensive production is intense, particularly for products like ammonia, which incur high CO2 levies in Europe. Nevertheless, he remains 'not fatalistic.' Europe will still have a strong chemical industry in ten years, even if its structure has evolved.

Kamieth aims to steer the struggling chemical giant back on track. BASF has been grappling for years with high energy costs in Germany, global overcapacity, and competition from China. The flagship plant in Ludwigshafen, which employs 33,000 people - roughly a third of the global workforce - has been loss-making for some time.

BASF recently announced plans to reduce fixed costs in its core business by up to 20 percent, involving further job cuts. Kamieth intends to sharpen BASF's focus on its core operations. For instance, a majority stake in the coatings business is being sold to US private equity firm Carlyle, while the agricultural division is slated for an IPO./als/mne/lea/