Iran warns that fines may drive oil prices up
International tensions with Iran grow as the third-largest exporter of oil issues a warning that it may halt production if new sanctions are imposed.
The New York Times
Alarmed by the possibility of new Western penalties that could abruptly reduce or even halt its oil exports, Iran issued a warning Monday that crude-oil prices could more than double to $250 a barrel if such sanctions were given serious consideration.
The warning, issued by the Foreign Ministry, appeared to be an attempt to intimidate Iran's adversaries as tensions grow. Western nations stepped up efforts to isolate Iran diplomatically after mobs vandalized Britain's Embassy in Tehran last week. Despite the warning, oil prices were little changed by the end of the day.
Leaders in Iran are increasingly concerned that oil sales, Iran's main source of income, are at risk in ways that they were able to avoid in earlier rounds of Western sanctions. Those sanctions were imposed to press Iran, so far unsuccessfully, to halt its suspect nuclear program.
Iran is the third-largest exporter of oil, after Saudi Arabia and Russia. Its biggest customers — China, the European Union, Japan, India and South Korea — account for two-thirds of Iran's total oil exports, according to an analysis published by the Energy Information Administration in the United States.
After the assault on the British Embassy, European Union ministers said they would consider an oil embargo at a meeting in January, and the U.S. Senate voted 100-0 for legislation that would penalize any foreign bank that does business with Iran's central bank.
Analysts said that such a measure, if enforced, could wreak havoc on Iran's oil industry, because the central bank is the main conduit for receipts from oil sales.
The price of the benchmark grade of U.S. crude oil closed at $100.99 on the New York Mercantile Exchange, up from $100.96 Friday.
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