Ban Iranian Oil? We’ll Shut Down the Persian Gulf

LONDON (Dow Jones)–Iran would block the Strait of Hormuz if it came under an oil embargo, an Iranian lawmaker was quoted as saying Sunday, apparently referring to U.S. plans to sanction Tehran’s Central Bank.

The remarks could trigger new jitters in the oil market after crude futures rose sharply Tuesday over rumors–which were denied–that Iran had closed the world’s most vital oil-shipping channel.

According to the official Fars news agency, lawmaker Isa Ja’fari told parliament that: “If an oil embargo is placed on Iran, we will not allow a single barrel of oil to pass through here to the belligerent countries.”

The statements are in sharp contrast with a reassuring pledge by Iranian Oil Minister Rostam Ghasemi last week that the country wouldn’t block the Strait and that he didn’t expect Europe to enforce a ban on its oil.

But lawmaker Ja’fari said Western nations “have not learned their lesson yet and they are once again thinking of imposing an oil embargo on Iran.

“This has even been approved in the American Senate,” he said.

He appeared to refer to legislation to sanction Iran’s Central Bank, which clears a large part of Iran oil sales. Such measure, which would be separate from a European oil ban considered in Europe, would make it difficult for international buyers to purchase Iranian oil. But the White House has yet to sign the measure into law, as it seeks to strike a balance between tackling Iran’s controversial nuclear and avoiding instability in oil markets.

The Iranian oil lawmaker said: “America should know that the world’s energy gullet, that is to say, the Strait of Hormuz, is in our hands.”

A rumor last week that Iran was preparing to shut the Strait was fueled by remarks by another Iranian lawmaker that it was preparing military exercise to shut the Strait. But the area is heavily patrolled by the U.S. Navy.

The lawmaker said Iran’s warning was supported by an article of the 1958 United Nations convention on territorial waters that states that “passage [of foreign ships] is innocent so long as it isn’t prejudicial to the peace, good order or security of the coastal state.”

The Strait, which is located between Iran and Oman, handles about 33% of all ocean-borne trader oil, according to the U.S. Energy Information Administration.

-By Benoit Faucon, Dow Jones Newswires

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