Iran issues stark warning on oil price

Iran stepped up its defiance of international pressure over its nuclear programme yesterday by warning of soaring oil prices if it is subjected to economic sanctions. As diplomats from the US, Europe, Russia, and China prepared to meet today in London to discuss referring Tehran to the UN security council, Iran's economy minister, Davoud Danesh-Jafari, said the country's position as the world's fourth-largest oil producer meant such action would have grave consequences.

"Any possible sanctions from the west could possibly, by disturbing Iran's political and economic situation, raise oil prices beyond levels the west expects," he told Iranian state radio.
In a provocative move, Iran also announced plans yesterday to convene a "scientific" conference to examine the evidence supporting the Holocaust. The news comes weeks after President Mahmoud Ahmadinejad provoked a global outcry by describing the slaughter of 6 million Jews by the Nazis in the second world war as a "myth".

Mr Danesh-Jafari's comments echoed fears voiced by energy market analysts after crude oil prices last week rose above $64 (�36.50) a barrel as hopes faded of a diplomatic solution to the dispute.

Last week, Manouchehr Takin, of the Centre for Global Energy Studies, argued that crude prices could hit $100 a barrel if Iran stopped exporting. "Supply and demand are very tightly balanced," he said.

Mr Danesh-Jafari's warning added weight to veiled threats by Iran's president on Saturday. Iran had a "cheap means" of achieving its nuclear "rights", Mr Ahmadinejad said, adding: "You [the west] need us more than we need you. All of you today need the Iranian nation."

Recognising the danger, Gernot Erler, Germany's deputy foreign minister, said yesterday: "We are seeing desperate measures by Asian countries, mainly China, India and others, to get hold of energy resources, and for them Iran is a partner they can't do without." He said it was "dangerous" to put restrictions on trade relations "which could hurt one's own side more than the other side".