Iran appears to have elevated its threat of closing the Strait of Hormuz with a senior adviser to Supreme Leader Ayatollah Khamenei warning that if prevented from selling oil, Iran would retaliate by blocking other countries from doing the same.
In an interview with the state-run Press TV, Ali Akbar Velayati, a former Foreign Minister and the adviser, said “Tehran will not allow a condition to arise wherein others are allowed to sell oil and Iran is not”.
He dismissed as “futile” the latest EU sanctions, under which the 27-nation bloc will from July 1 boycott purchases of Iranian oil.
The EU has also frozen assets of Iran's Central Bank, and banned trade with Iran of gold, diamonds and other precious metals.
Mr. Velayati said European policymakers were overlooking the inflationary impact of the embargo on global oil prices.
He also stressed that EU's decision could reshape the pattern of global oil trade, amplifying the Iranian view that energy hungry emerging markets such as China, India and Brazil can easily replace the bloc as buyers of surplus Iranian crude.
On Friday, fresh signals emerged that instead of waiting for the embargo to kick in after six months, Iran may take the immediate step of barring oil exports to the EU. At his Friday sermon — which usually echoes the thinking of the Supreme Leader — senior cleric Ahmad Khatami said: “Why wait six months [for sanctions to be enforced], why not right away? The answer is clear. They [the EU] are in trouble; they are grappling with crisis.”
Iran's semi-official Fars News Agency (FNA) quoted Hossein Ibrahimi, vice-chairman of Parliament's national security and foreign policy committee, as saying on Sunday Parliament would “have to approve a ‘double emergency' bill calling for a halt in the export of Iranian oil to Europe starting next week”.
The sense of outrage in Parliament was in full flow On Thursday. “Europe will burn in the fire of Iran's oil wells,” said Nasser Soudani, a member of the Parliament's energy committee, said.
Under their plan, he said, “All European countries that made Iran the target of their sanctions will not be able to buy even one drop of oil from Iran,” according to FNA. He added that the Europeans would be “extinguishing candles of their economic lives,” if they decided to abandon purchases of Iranian oil.
Analysts point out that in the likelihood of the imposition of a pre-emptive sales embargo on the EU, Iranians would be flushed with surplus oil, which they were likely to sell to Asian buyers at a deep discount. Consequently, these countries could benefit and were likely to have sufficient margins to produce cheaper refined products than their European counterparts.
Apprehending such a scenario, Piero De Simone, head of Italy's refiners' lobby, said: “Asian countries not applying the embargo could buy the Iranian oil at a discount and sell cheap refined products back to us.” In an interview with Bloomberg, he observed that Italy — one of the major buyers of Iranian oil — was at risk of closing “five refineries and at a European level [and] we're talking about 70 possible shut downs”. With the prospects of a full blown economic warfare looming, Mr. De Simone pointed that smaller and older plants specialising in the heavy crude that Iran provides would be the hardest hit by the embargo.
