Iran threatens to stop Gulf oil if sanctions widened

TEHRAN: Iran has threatened to stop the flow of oil through the Strait of Hormuz if foreign sanctions were imposed on its crude exports over its nuclear ambitions, a move that could trigger military conflict with economies dependent on Gulf oil.

Sanctions will not succeed in stopping Iran's nuclear progress, its president said major powers said they had "serious and constructive" talks about new UN punitive measures.

President Mahmoud Ahmadinejad, speaking at an annual military parade to commemorate the 1980-1988 Iran-Iraq war, also reiterated a call on US and other foreign forces to leave neighbouring Iraq, the official IRNA news agency said.

"Those who think, that by using such decayed tools as psychological warfare and economic sanctions, they can stop the Iranian nation's progress are making a mistake," he said.

As he spoke, troops, tanks, and other military hardware passed by the podium in the parade area near the tomb of Ayatollah Ruhollah Khomeini, the founder of the Islamic Republic.

During the event, Iran showed off missiles including the Shahab-3, which it says can hit targets 2,000 km (1,250 miles) away, putting Israel or US bases in the Gulf within range.

Iran, which says its nuclear programme is for peaceful purposes, has threatened to hit back at US interests in the Middle East if attacked.

Major Powers met in Washington on Friday for talks about new UN Security Council sanctions aimed at trying to force Iran to halt its sensitive atom work. The Council has imposed two rounds of limited sanctions on Tehran since December.

The officials of the five permanent Security Council members and Germany said they will keep pursuing a "dual track" approach to Iran -- trying to persuade it to abandon such atomic work via negotiations while considering new sanctions.

"The nations throughout the region do not need the presence of the foreigners," he said
Iran threatens to stop Gulf oil if sanctions widened

Western tensions with Iran have increased since a November 8 report by the U.N. nuclear watchdog saying Tehran appears to have worked on designing an atomic bomb and may still be pursuing research to that end. Iran strongly denies this and says it is developing nuclear energy for peaceful purposes.

Many diplomats and analysts believe only sanctions targeting Iran's lifeblood oil sector might be painful enough to make it change course, but Russia and China - big trade partners of Tehran - have blocked such a move at the United Nations.

Iran's warning on Tuesday came three weeks after EU foreign ministers decided to tighten sanctions over the U.N. watchdog report and laid out plans for a possible embargo of oil from the world's No. 5 crude exporter.

"If they (the West) impose sanctions on Iran's oil exports, then even one drop of oil cannot flow from the Strait of Hormuz," the official Iranian news agency IRNA quoted Iran's First Vice President Mohammad Reza Rahimi as saying.

- Iran threatens to block Strait of Hormuz oil lane to West
- Saudis, other Gulf states ready to replace Iranian exports
- Closure of Strait of Hormuz could be spark for war
- Faces more sanctions after UN finds signs of atom bomb bid
- EU has mooted possible embargo on Iranian oil exports

"If they (the West) impose sanctions on Iran's oil exports, then even one drop of oil cannot flow from the Strait of Hormuz," the official Iranian news agency IRNA quoted Iran's First Vice President Mohammad Reza Rahimi as saying.

The U.S. State Department said it saw "an element of bluster" in the threat but underscored that the United States would support the free flow of oil.

"First, the U.S. will probably not allow Iran to close the Strait. That's a major economic thoroughfare and not just for oil. You shut that Strait and we are talking a major hit on many Middle East economies," said Carl Larry, president of Oil Outlooks in New York.

"Second, there is no way that the Saudis (alone) have enough oil or quality of oil to replace Iranian crude. Figure Saudi spare capacity is 2 to 4 million at best. Of that spare, about 1-2 million is real oil that is comparable out of Iran. Lose Iran, lose 3.5 million barrels per day of imports. No way."

French President Nicolas Sarkozy proposed hitting Iran with an oil embargo and won support from Britain, but resistance to the idea persists within and outside the European Union.

An import ban might raise global oil prices during hard economic times and debt-strapped Greece has been relying on attractively financed Iranian oil.

Iran's seaborne trade is already suffering from existing trade sanctions, with shipping companies scaling down or pulling out as the Islamic Republic faces more hurdles in transporting its oil.