Iran yesterday threatened to close the Strait of Hormuz, a chokepoint for a third of the worlds seaborne oil trade, if the west imposes oil sanctions on Tehran, causing a spike in oil prices.
The warning by Mohammad Reza Rahimi, Irans first vice-president, came days after Iran staged naval war games in the strait.
If they [the west] impose sanctions on Irans oil exports, then not even one drop of oil can flow through the Strait of Hormuz, he told the official Iranian news agency Irna. Iranian officials have in the past threatened to shut down oil traffic through the strait, but Mr Rahimis comments are the strongest yet.
France, Germany and the UK are pushing for an embargo on Iranian oil exports to Europe, although several countries, include Greece, have some reservations. European Union foreign ministers are due to consider the embargo on January 30.
It was not clear whether Mr Rahimi had official backing for his comments. Only senior commanders of Irans Revolutionary Guards can take actions such as closing the strait in the face of foreign threats.
The government of Mahmoud Ahmadi-Nejad is engaged in a tense power struggle against conservatives in the Revolutionary Guards, the judiciary and parliament in advance of parliamentary elections in March, and
Mr Rahimis remarks could be an attempt by the presidents circle to project an image of strength vis--vis the west and deflect attention from Irans economic woes.
The Strait of Hormuz is the worlds most important oil chokepoint, according to the US Department of Energy. On average at least 13-15 supertankers cross the strait every day, most of them heading towards Japan, South Korea, India and China. The US Navy patrols the waterway and analysts believe that Iran would not be able to shut it down.
In late afternoon trading in London, ICE February Brent, the global benchmark, rose $1.21 to $109.17 a barrel. In New York, Nymex February West Texas intermediate rose $1.47 to $101.15 a barrel. The price surge was amplified by thin trading due to the Christmas holiday. Trading volumes were about a quarter of normal levels.
Syria confirmed it had cut oil production to 260,000 barrels a day, down from a pre-crisis level of 380,000 b/d, due to the impact of an EU oil embargo.
The Financial Times Limited 2011