Iran threatens to cut oil exports if Western sanctions tighten
The Islamic Republic's oil minister tells reporters that Iran has prepared plans on how to run the country without oil revenues.
Iran said on Tuesday it would stopoil exports if pressure from Western sanctions got any tighterand that it had a "Plan B" contingency strategy to survivewithout oil revenues.
Western nations led by the United States have imposed toughsanctions on the Islamic Republic this year in an attempt tocurb its nuclear program that they say is designed to produceatomic weapons. Tehran says its nuclear plans are peaceful.
"If sanctions intensify we will stop exporting oil," Iranianoil minister Rostam Qasemi told reporters in Dubai.
Qasemi's statement is the latest in a series of threats ofretaliation by Tehran in response to the sanctions, which haveheightened political tensions across the Middle East andanalysts say, led to a sharp drop in Iranian oil exports.
"We have prepared a plan to run the country without any oilrevenues," Qasemi said, adding, "So far to date we haven't hadany serious problems, but if the sanctions were to be renewed wewould go for 'Plan B'.
"If you continue to add to the sanctions we (will) cut ouroil exports to the world... We are hopeful that this doesn'thappen, because citizens will suffer. We don't want to see
European and U.S. citizens suffer," he said, adding that theloss of Iranian oil on the market would drive up oil prices.
The U.S. government has focused on blocking Iran's oilexports because it estimates that crude sales provide about halfof Iranian government revenues and that oil and oil productsmake up nearly 80 percent of the country's total exports.
The rial plunged by about a third against the U.S. dollar inthe week to Oct. 2, reflecting a slide in oil income wrought bytightened sanctions over summer aimed at pressuring Tehran todrop its nuclear program.
How long the economy could function without selling any oilis unclear, but Iran has large currency reserves accumulatedover decades as one of the world's largest oil suppliers.
"What else can they export to generate the necessaryrevenues?" Carsten Fritsch of Commerzbank said in the ReutersGlobal Oil Forum.
Because of the slide in the rial and oil export earnings, the government is already moving onto an austerity footing, cutting imports of non-essential goods and urging its citizensto buy fewer foreign products.
Iran has in the past said it could shut the vital shippinglane of Hormuz at the head of the Middle East Gulf. However, alarge Western naval force sent to keep open the route, throughwhich about a third of the world's seaborne oil exports pass
might be a large obstacle to such an attempt.
Earlier on Tuesday, Qasemi said Iran was still producing 4million barrels per day (bpd), rejecting reports the country'soutput has fallen to around 2.7 million bpd.
According to the latest secondary source estimates publishedby the Organization of the Petroleum Exporting Countries, Iranpumped just 2.72 bpd in September, and Iran's own data submittedto OPEC showed the country produced 3.75 million bpd in August.
The International Energy Agency (IEA) estimates that Iranianexports fell to a new low of 860,000 bpd in September, down from 2.2 million bpd at the end of 2011.
Assuming a crude oil price of e110, such a sharp drop meansIran making just e95 million dollars from daily crude sales lastmonth, about e147 million less every day than it was making latelast year.
Nevertheless, Qasemi said Iran was pumping oil at fullcapacity and refining more of its own oil to meet domesticdemand.
"It is currently 4 million barrels per day," he said,declining to give export figures.
"Iran has been facing U.S. sanctions for 30 years whilesuccessfully managing its oil sector," he said.
He said Iran's refining capacity was now 2 million barrelsper day (bpd) with another 200,000 bpd of capacity to be addedbefore the end of Iranian year next March.
The increase in refining capacity had already ended Iran'sneed to import vehicle fuel and could soon drive a boom in fuelexports, the minister said.
"Our daily consumption of petrol (gasoline) is 90 millionliters ... Earlier, a big portion of that was being imported butwe no longer import products," he said.
"Right now, we not only don't import but we also export someproducts ... there are always customers for Iranian oil.
"By the end of the Iranian year they will reach theirmaximum capacity and then we can export more Iranian oilproducts," he said.