For Iran, seizure pays

By Charley Blaine

So, what did Iran get out of holding on to 15 British sailors and marines for some 10 days?

A lot of attention from the West, that's for sure -- and possibly an extra $167 million in oil revenue.

No, there wasn't a ransom paid, but the standoff did push the price of crude oil abruptly higher around the world.

• Get free, real-time stock quotes on MSN Money

Crude oil came down after Iran released the Britons, but it is still roughly $3 a barrel more expensive than before they were seized, oil analyst Peter Beutel says.

Here's how the Iranians could realize $167 million from the episode:

• Let's start with $57.78 a barrel. This is the quoted basket price of crude oil from the Organization of Petroleum Exporting Countries on March 22. That was the day before Iran seized a British dinghy that the Iranians charge had strayed into their territorial waters. This will serve as a proxy to help in these admittedly rough calculations.

• The common estimate of Iranian oil production is about 3.8 million barrels a day.

• At $57.78, Iran might have generated as much as $219.6 million on March 22.

• Over the next 10 business days, the OPEC basket price moved higher, peaking at $63.97 a barrel on Thursday. That meant each day Iran held on to the Britons, Iran would have a little windfall over the March 22 closing price. That windfall would have been $4.3 million on March 23. It reached nearly $23.5 million on Thursday, when the OPEC basket price was $63.97 a barrel.

Adding the differentials together through Thursday, when the 15 Britons flew home, and the increase theoretically comes to $167.4 million.

In fairness to Iran, it sells oil to various customers at contracted prices, and not all of the oil may be sold at the spot price. Moreover, Iran holds onto a sizeable chunk of its production for domestic use, which would cut into additional revenue it could realize. The OPEC basket price may not be how Iran prices all those contracts.

Nonetheless, Iran gains financially because the standoff with the Britons pushed oil prices higher, says Beutel, the president of Cameron-Hanover, an oil consulting firm in Connecticut. And the Iranians were able to affect the global oil markets without having to deal with their rival Saudi Arabia.

So that theoretical $167 million is still growing.

That's on top of the premium now built into oil prices since the Iraq war began in 2003. That premium is said to be $10 to $15 a barrel over what crude oil would sell for just based on what the energy industry calls the fundamentals.

For the Iranians, that's worth $38 million to $57 million every day.

More importantly, as Beutel says in a note to clients, the U.S.-led allies "will have a more difficult time enforcing the new UN embargoes than they may have initially believed. Iran is not going to let Allied search and seizure crews pursue smugglers into Iranian waters, maybe not even into disputed waters."