Iran says oil would go over $250 if exports banned

TEHRAN Sun Dec 4, 2011 7:52am EST

Iranian Foreign Ministry Spokesman Ramin Mehmanparast speaks with a Reuters correspondent during an interview in Tehran June 29, 2011. REUTERS/Caren Firouz

Iranian Foreign Ministry Spokesman Ramin Mehmanparast speaks with a Reuters correspondent during an interview in Tehran June 29, 2011.

Credit: Reuters/Caren Firouz

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TEHRAN (Reuters) - Iran warned the West on Sunday any move to block its oil exports would more than double crude prices with devastating consequences on a fragile global economy.

"As soon as such an issue is raised seriously the oil price would soar to above $250 a barrel," Foreign Ministry spokesman Ramin Mehmanparast said in a newspaper interview.

The comments come as Iran strives to contain international reaction to the storming of the British embassy last week, a move which drew immediate condemnation from around the world and may galvanize support for tougher action against Tehran.

Washington and EU countries were already discussing measures to restrict oil exports after the United Nations nuclear watchdog issued a report in November with what it said was evidence that Tehran had worked on designing an atom bomb.

Iran says its nuclear program is entirely peaceful.

The U.S. Senate voted on Thursday to penalize foreign financial institutions that do business with Iran's central bank

-- which takes payment for the 2.6 million barrels Iran exports a day. The European Union is considering a ban -- already in place in the United States -- on Iranian oil imports.

So far neither Washington nor Brussels has finalized its move against the oil trade or the central bank amid fears of the possible impact on the global economy of restricting oil flows from the world's fifth biggest exporter.

But the British embassy attack dragged relations with Europe to a long-time low and Iran is now facing rising rhetoric about a direct hit on its main source of foreign earnings.

Until recently, Iran had dismissed as ineffective mounting sanctions aimed at forcing it to halt its nuclear activities. Mehmanparast's comments show a more defensive stance.

"No one welcomes the sanctions, we know that sanctions create obstacles, but we want to say we will overcome these obstacles," Mehmanparast told Sharq daily.

"Imposing sanctions on oil and gas is among the sanctions that, if one wants to do that, the consequences should be fully considered before taking any action," Mehmanparast said.

"I do not think the situation in the world and especially in the West today is prepared enough to raise such discussions."

Britain's embassy in Tehran was ransacked on Tuesday after London announced unilateral sanctions on Iran's central bank. London evacuated staff, closed the embassy and the biggest EU states withdrew their ambassadors in protests.

Rising tensions were enough to push up crude prices with ICE Brent January crude up 95 cents on Friday to settle at $109.94 a barrel.

Mehmanparast warned the EU on Saturday to avoid tying itself to British interests.

(Reporting by Ramin Mostafavi; Writing by Robin Pomeroy; Editing by Maria Golovnina)

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Comments (28)
kaceltd wrote:
It is my view, that crude petroleum will continue to rise in price due both to the cost of production and demand. This is NOT beneficial to small open economies and seriously retards growth in the larger ones. The sooner we attempt to diversify away from fossil fuels for both the transportation system and energy generation, the quicker we will innovate the new technologies to create new industry and employment. We can expect some benefits to the environment. If $250.00 a barrel oil does it, lets do it……..

Dec 04, 2011 6:11am EST  --  Report as abuse
eagerwatcher wrote:
Just a crock of exaggerated you know what!

Whereas the Obama administration peevishly argues that an embargo on Iranian oil will raise world oil prices, this week the British openly called for an embargo on Iranian oil. In truth such an embargo would harm Iran far more than it would harm the global economy. Europe buys 20 to 25 percent of Iran’s oil exports, but Iranian oil makes up only 5% of European oil imports. At least in the short run, Saudi Arabia could pick up the slack, thus ensuring stability in global oil prices.

Dec 04, 2011 6:35am EST  --  Report as abuse
cosmicdamian wrote:
That blocking Iran oil from the market would be a disaster I think is right, but $250/barrel oil is not even remotely possible. Oil at $140/barrel all but caused the global economy to collapse in 2008. $20/barrel is what we should expect, as a brief spike to 150 or 160 causes catastrophic demand destruction, followed by worldwide depression. We are long past the point of mitigating this pathetic situation too. Someone needs to remind the criminally negligent U.S. leadership that you can’t build solar panels with out oil…

Dec 04, 2011 6:38am EST  --  Report as abuse
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