Iran says may use oil as weapon to defend interests

"Tehran would not use oil as a weapon, but if its interests come under attack, it will use all available means, including oil," he said, according to a transcript of an interview posted today on the Web site of Iran's main state television station.

As Bloomberg reported, Vaziri-Hamaneh said oil prices would reach 'over $100' a barrel should Western nations try to impose an oil embargo on Iran to pressure it to halt its uranium enrichment program.

Crude oil prices have been gaining this year in part due to mounting tension over the Islamic nation's nuclear program and its vow to enrich uranium for generating atomic power. Oil for August delivery closed at $70.87 a barrel on the New York Mercantile Exchange June 23, up 1 percent this week and 19 percent higher than a year ago.

Iran has said its nuclear program is for civilian purposes and intended to generate electricity, in compliance with the nuclear Non-Proliferation Treaty, of which it is a signatory. The country denies U.S. claims that it is developing atomic weapons in breach of that international agreement. The U.S. has led an effort to put the issue before the United Nations Security Council, which has the power to impose sanctions.

China and Russia, who have veto power on the Security Council, have so far resisted any UN measure that would include sanctions or the threat of military action.

"The threat of oil disruption is just part of the mud-slinging rhetoric, but no one believes, at least no one around here, that it will get that bad," said Anthony Harris, former British Ambassador to the United Arab Emirates. "There will be a lot of voices in Tehran in favor of a negotiated settlement, and in keeping China and Russia in their corner."

Vaziri-Hamaneh wasn't specific about how oil might be used as a weapon. Neither was Ayatollah Ali Khamenei, Iran's supreme leader, when he said on June 4 that the U.S. could "seriously endanger energy flow in the region" by acting against Iran's nuclear program.

Even so the oil minister's statements appeared to toughen the posture he presented nine weeks ago. On April 23 Vaziri- Hamaneh, who took office in December, excluded a possible reprisal involving oil. He told reporters that day in Doha, Qatar, that "whatever happens, we have no intention, as we have said repeatedly, of doing anything to oil exports."

In an interview broadcast on Saturday and repeated on Iranian state television on Sunday in excerpts, Vaziri-Hamaneh suggested Iran may use oil in some form of retaliation when asked by the television show's presenter, "Would Iran use oil as a weapon in times of possible sanctions?"

Iran, which derives more than 80 percent of its export revenue from crude oil, could paralyze its economy by halting its own oil exports. The country expects oil revenue to rise to "more than $60 billion" this year, the oil minister said on television. That's about double as much as the $31.5 billion Iran earned through crude exports in 2004.

If Iran cuts oil exports, the international community could also retaliate by cutting gasoline exports to Iran, analysts have said. Iran buys more than a third of its gasoline from other nations because it has failed to ease subsidies, cut waste and boost refining capacity.

Iran is currently pumping 3.8 million barrels a day, Bloomberg data show. That's 50 percent less than before the revolution 27 years ago. Iran's oil output has stagnated for more than two years. Administrative delays, technical glitches, tough contract terms and Iran's economic isolation because of U.S. trade sanctions have hampered the sector's development.

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