Iran threatens to stop Gulf oil if sanctions widened

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. Western tensions with Iran have increased since a November 8 report by the UN nuclear watchdog saying Tehran appears to have worked on designing an atom bomb and may still be pursuing research to that end. Iran strongly denies this and says it is developing nuclear energy for peaceful purposes. Iran has defiantly expanded nuclear activity despite four rounds of UN sanctions meted out since 2006 over its refusal to suspend sensitive uranium enrichment and open up to UN nuclear inspectors and investigators. 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 UN 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.
The US 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.

"It's another attempt to distract attention away from the real issue, which is their continued non-compliance with their international nuclear obligations," spokesman Mark Toner said.

Mr Rahimi's remarks coincided with a 10-day Iranian naval exercise in the Strait and nearby waters, a show of military force that began on Saturday.
"Our enemies will give up on their plots against Iran only if we give them a firm and strong lesson," Mr Rahimi said.
EU ministers said on December 1 that a decision on further sanctions would be taken no later than their January meeting but left open the idea of an embargo on Iranian oil.
Countries in the 27-member European Union take 450,000 barrels per day of Iranian oil, about 18 per cent of the country's exports, much of which go to China and India. EU officials declined to comment on Tuesday.
About a third of all seaborne oil was shipped through the Strait of Hormuz in 2009, according to the US Energy Information Administration (EIA), and US warships patrol the area to ensure safe passage.

Most of the crude exported from Saudi Arabia, Iran, the UAE, Kuwait and Iraq - together with nearly all the liquefied natural gas from lead exporter Qatar - must slip through the Strait of Hormuz, a 6.4-kilometre wide shipping channel between Oman and Iran.
Iran has also hinted it could hit Israel and US interests in the Gulf in response to any military strike on its nuclear installations - a last resort option hinted at by Washington and Israel.
However, some analysts say Iran would think hard about sealing off the Strait since it could suffer just as much economically as Western crude importers, and could kindle war with militarily superior powers.
"To me, if Iran did that it would be a suicidal act by the regime. Even its friends would be its enemies," said Phil Flynn, analyst at PFG Best Research in Chicago.
Industry sources said on Tuesday No 1 oil exporter Saudi Arabia and other Opec states were ready to replace Iranian oil if further sanctions halt Iranian crude exports to Europe.
The Iranian oil minister, Rostam Qasemi, had said that Saudi Arabia had promised not to replace Iranian crude if sanctions were imposed.
"No promise was made to Iran, its very unlikely that Saudi Arabia would not fill a demand gap if sanctions are placed," an industry source familiar with the matter said.