Iran’s oil threat

According to the UK Times, Iran is threatening to cut oil production if the UN imposes sanctions due to the continuation of their nuclear program.

Defiant Iran threatens to use ‘oil weapon’ against sanctions

By Richard Beeston, Diplomatic Editor

IRAN yesterday rejected a United Nations demand that it halt uranium
enrichment work, vowing instead to expand its controversial nuclear
programme and threatening to block oil exports to the West if sanctions
are imposed.

In a blunt response to international concern about
Iran’s nuclear ambitions, Ali Larijani, the chief negotiator on atomic
issues, said that Tehran was ready for a showdown with world powers
when the matter was taken up by the UN Security Council this month.
“We will expand nuclear technology at whatever stage it may be
necessary and all of Iran’s nuclear technology including the
[centrifuge] cascades will be expanded,” he said in Tehran.

and furthrer down…

Mr Larijani said yesterday that Iran had a right under the nuclear Non-Proliferation Treaty (NPT) to build a civilian nuclear programme. He said Iran was planning to expand its operations at the heavily-guarded Natanz facility in central Iran, where the authorities hope to have 3,000 centrifuges — which enrich uranium by spinning it at supersonic speeds — operating by the end of this year. “We will expand nuclear activities where required. It includes all nuclear technology including the string of centrifuges,” he said. ”We won’t accept suspension.”

Mr Larijani also served warning that Iran would retaliate if the world imposed sanctions. “We will react in a way that would be painful for them. They should not think that they can hurt us and we would stand still without a reaction.
“We do not want to use the oil weapon. Do not force us to do something that will make people shiver in the cold. We do not want that,” he said.

Experts are divided over whether Iran would carry out its threat to withhold oil sales as a political weapon. The dispute with Iran is already responsible for pushing crude oil prices up to record levels.
As Iran is the fourth largest Opec exporter, a freeze on oil sales could push up prices even further and could trigger an energy crisis.
Iran would, however, also suffer greatly.
Oil accounts for 80 per cent of the country’s export earnings and the local economy would collapse if crude exports were halted indefinitely.

If you add the fact that the Lebanese government has rejected the UN’s proposition to end hostilities with Israel, oil prices seem to have no alternative but going up…

Here’s part of FT’s account:

Lebanon dismisses UN draft resolution

By William Wallis in Beirut and Harvey Morris in Jerusalem
Published:

August 6 2006 16:30 | Last updated: August 6 2006 22:16

Lebanon on Sunday rejected outright the Franco-American draft of a United Nations resolution to end Israel’s war with Hizbollah, saying it was fundamentally one-sided and failed to take into account its own proposals for a resolution of the conflict.

What next?