Iran says oil would go over $250 if exports banned

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.