Iran: Oil could hit $200 if U.S. pursues sanctions

Iran: Oil could hit $200 if U.S. pursues sanctions

8/3/2006 5:00:00 PM GMT

http://www.aljazeera.com/me.asp?service_ID=12399

World oil prices could reach $200 per barrel if the United States pursues international sanctions against Iran, an Iranian official warned on Thursday.

"The first consequence of these sanctions would be an increase in the price of oil to around $200 per barrel,” Iran’s Foreign Relations Vice Minister Manuchehr Mohammadi told Venezuelan state television.

Mohammadi’s warning comes three days after the United Nations Security Council adopted resolution that demanded Tehran to halt uranium enrichment within a month or face possible sanctions.

However, the UN resolution stopped short of an immediate threat of sanctions, which have been strongly opposed by Russia and China, saying that punitive action would be the subject of further discussions.

Iran denies Western claims that its nuclear program is a cover for building an atomic bomb, insisting that it has the right to enrich uranium for peaceful purposes as a signatory to the Nuclear Non-Proliferation Treaty (NPT).

On Tuesday, Iran’s President Mahmoud Ahmadinejad vowed that Tehran won’t bow to the “language of force and threats".

“Iranians consider it their right to exploit peaceful nuclear fuel cycle technology and insist on their undeniable right," Ahmadinejad said.

"If some people think they can talk to us with a language of force and threats, they are making a bad mistake. If they don’t realize that now, one day they will learn it the hard way," he warned.

However, some analysts undermined the Iranian warnings. "While we can’t rule out $200 oil, I think we can assign it a rather low probability," said Tim Evans, an Energy Analyst with Citigroup Futures Research.

Tensions over Iran’s nuclear program, which has rattled oil markets in recent weeks, has been overshadowed by the deadly Israeli offensive in Lebanon.

"While the Security Council does not dare to condemn the Qana massacre (which killed 54 civilians in southern Lebanon) ... it feels alarmed by Iran’s nuclear activities and adopts a resolution that is worthless in the eyes of the people," parliament speaker Gholam-Ali Hadad-Adel said on Tuesday.

If Iran doesn’t halt uranium enrichment by August 31, the UN Security Council will discuss a new resolution that allows for economic and political sanctions against the Islamic Republic under Chapter 7 of the UN charter.

However, correspondents say Chapter 7 doesn’t pave the ground for the use of force, an option Washington might seek if Tehran refused to meet its demands.