Iran Nuclear Watch: Iran Warns West of Soaring Oil Prices

In an undated photo provided by the Energy Department, a crude oil is delivered by tanker to the Reserve at an undisclosed location on the U.S. Gulf Coast. Crude futures fell Friday but the market continued to fret over the potential impact of Iran’s nuclear ambitions.

Guardian Unlimited: Iran issues stark warning on oil price

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Iran stepped up its defiance of international pressure over its nuclear programme yesterday by warning of soaring oil prices if it is subjected to economic sanctions. As diplomats from the US, Europe, Russia, and China prepared to meet today in London to discuss referring Tehran to the UN security council, Iran’s economy minister, Davoud Danesh-Jafari, said the country’s position as the world’s fourth-largest oil producer meant such action would have grave consequences.

“Any possible sanctions from the west could possibly, by disturbing Iran’s political and economic situation, raise oil prices beyond levels the west expects,” he told Iranian state radio.

Any short-term increase in oil prices is worth the price if it eliminates Iran’s nuclear program. Long term price increases will motivate the Democrats in the U.S. Senate to allow more domestic oil production.

If the Iranians would prefer, the United States could blockade their sea access and shipping lanes.

Mr Danesh-Jafari’s comments echoed fears voiced by energy market analysts after crude oil prices last week rose above $64 (Â£36.50) a barrel as hopes faded of a diplomatic solution to the dispute.

Last week, Manouchehr Takin, of the Centre for Global Energy Studies, argued that crude prices could hit $100 a barrel if Iran stopped exporting. “Supply and demand are very tightly balanced,” he said.

Mr Danesh-Jafari’s warning added weight to veiled threats by Iran’s president on Saturday. Iran had a “cheap means” of achieving its nuclear “rights”, Mr Ahmadinejad said, adding: “You [the west] need us more than we need you. All of you today need the Iranian nation.”

The Iranians should not test the resolve of the American people and President George W. Bush.

Although Britain has ruled out military moves against Iran, two American senators yesterday said the US might undertake a strike of “last resort” to prevent Iran obtaining nuclear weapons. The Republican John McCain told CBS: “Everything else has to be exhausted, but to say under no circumstances would we exercise a military option would be crazy.” Democrat Evan Bayh urged diplomacy, but said there were elements of Iran’s nuclear programme which, if attacked, “would dramatically delay its development”.

There is bipartisan political support in the United States for Iran economic sanctions and military action if Iran does NOT stand down their nuclear program.

This story continues to develop……

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