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Iran Issues Threat to Oil Buyers in Europe
By RICK GLADSTONE and ALAN COWELL
Besieged by international sanctions over the Iranian nuclear program including a planned oil embargo by Europe, Iran warned its six largest European buyers on Wednesday that it might strike first by immediately cutting them off from Iranian oil.

Iran’s official Islamic Republic News Agency said the warning was conveyed to the ambassadors of Italy, Spain, France, the Netherlands, Greece and Portugal in separate meetings at the Foreign Ministry in Tehran. Officials said an earlier report by Press TV, Iran’s state-financed satellite broadcaster, that Iran had already cut supplies to the six countries was inaccurate — but not before word of the Press TV report sent a brief shudder through the global oil market, sending prices up slightly.

“Iran warns Europe it will find other customers for its oil,” the Islamic Republic News Agency said. “European people should know that if Iran changes destinations of the oil it gives to them, the responsibility will rest with the European governments themselves.”

The European Union decided last month to impose an oil embargo on Iran as of July 1 as part of a coordinated campaign of Western sanctions aimed at pressuring Iran to halt its disputed uranium enrichment program, and the Europeans have been making arrangements since then to find other sources.

Saudi Arabia, the top producer in the Organization of Petroleum Exporting Countries, has said it could compensate for much of the shortfall created by the planned European embargo on Iran, which is OPEC’s second-largest producer.

On the New York Mercantile Exchange, the March-delivery price for oil was up by $1.08 a barrel on Wednesday afternoon to $101.82.

The combination of sanctions, including severe restraints on Iran’s ability to conduct routine banking and shipping operations, have caused severe disruptions to Iran’s economy as the nuclear program remains an increasingly acrimonious issue between Iran and the West.

The Iranian warning came on a day of mixed messages emanating from Iran’s hierarchy about its nuclear program, which Western nations and Israel have called a cover for Iranian attempts to become capable of making a weapon. Iran has said the program is peaceful.

At the same time Iran was warning its biggest European oil buyers, it also announced it was willing to reopen nuclear talks suspended a year ago in a letter to Catherine Ashton, the European Union’s top foreign policy official. The Iranians also announced new advances in their nuclear program, including escalation of Iran’s enrichment practices, which if accurate could serve to further aggravate tensions.

A spokeswoman for Ms. Ashton confirmed receipt of a letter from Dr. Saeed Jalili, who heads Iran’s Supreme National Security Council, sent in response to a letter from Ms. Ashton in October of last year. The spokeswoman, Maja Kocijancic, did not disclose the contents but said “we are carefully studying the letter.”

The Iranian side also did not reveal the letter’s contents, but the Islamic Republic News agency paraphrased Mr. Jalili as saying in the letter that “returning to the negotiation table would be the best means to broaden cooperation between the two sides.”

In Tehran, President Mahmoud Ahmadinejad presided over ceremonies to mark advances in Iran’s nuclear program, partly to project an image of Iranian defiance against the Western sanctions. The new advances include centrifuges that Iran said were capable of enriching uranium at a much faster rate, and the insertion of the first domestically produced nuclear fuel rod into a nuclear reactor in Tehran.

“The era of bullying nations has past,” Mr. Ahmadinejad said in a televised broadcast of the ceremony. “The arrogant powers cannot monopolize nuclear technology. They tried to prevent us by issuing sanctions and resolutions but failed.”

Iran’s nuclear announcements came as tensions have escalated in particular with Israel, which regards Iran as an existential threat and has hinted at the possibility of a pre-emptive military strike on Iran’s nuclear facilities to forestall its suspected ambitions.

Iran has accused Israel, a nuclear weapons state, of responsibility for a clandestine campaign aimed at sabotaging Iran’s nuclear ambitions, including the assassinations of at least four Iranian scientists since 2010. Israel has counter accused Iran in recent days of retaliatory plots aimed at Israeli targets in Georgia, India and Thailand, which Iran has denied.

Update (9:50 a.m. EST): Iran's oil ministry denied the state media report that the country was going to halt oil sales to Europe, as did Italy's foreign minister. "We deny this report ... If such a decision is made, it will be announced by Iran's Supreme National Security Council," a spokesman for the oil ministry told Reuters. And in Rome, Italian Foreign Minister Giulio Terzi said, "I have been informed by our ambassador in Tehran that the report isn't true," Dow Jones reports.

Update (9:50 a.m. EST): Iran's oil ministry denied the state media report that the country was going to halt oil sales to Europe, as did Italy's foreign minister. "We deny this report ... If such a decision is made, it will be announced by Iran's Supreme National Security Council," a spokesman for the oil ministry told Reuters. And in Rome, Italian Foreign Minister Giulio Terzi said, "I have been informed by our ambassador in Tehran that the report isn't true," Dow Jones reports.

Sounds like the right hand doesn't know what the left is doing, i.e., Iran is inching closer to a civil war. I'm not saying it's a good thing- I know civil wars tend to result in mass civilian casualties, general suffering, and the like- but does anyone want to bet which side the US and EU interventions will be in support of?

Uh... misinformed mass media = Iran is closer to civil war?

Civil war in Iran? Uh... misinformed mass media = Iran is closer to civil war?

No, not really. Unless you think a civil war in the USA is a credible idea based on political infighting as well.

You missed the point again. Just because there is political infighting in a nation =/= likely civil war.

The extent to which Iran represents a conventional military threat to Saudi Arabia is somewhat nuanced. A clash of armies is comparatively unlikely, since the Iranians would have to send their troops via Iraq and possibly Kuwait, a factor that raises its own complications. Even if the Iraqi government cooperates fully (a very risky course of action), the distances involved would leave the Saudis with a substantial amount of time to react. The Saudi army reputedly numbers around 150,000 and appears to be quite heavily armed, enough so that any Iranian force to make it that far would be in for a hard fight. They are also reputed to possess Chinese DF-3 missiles (without the nuclear warheads), allowing them to strike inside Iran without risking their air force.

The RSAF seems to have a clear technical advantage with its F-15/Eurofighter combo, and the RSAD comes with a number of Patriot batteries. I don't have any reliable information on the state of IRIAF training, and not much on RSAF training save that they have a substantial number of trainer aircraft and that the USAF and RAF are involved in the training programme, a fact that can be taken as an assurance of quality. In the event of an air clash I'm leaning strongly towards Saudi Arabia.

As for a naval clash, the Saudis seem to have the advantage there too. The RSN operates 7 frigates (3 are modified La Fayette class, so quite modern), 4 corvettes with Harpoons and Phalanx CIWS, and 9 patrol boats with the same. The IRIN has four light frigates (three Alvand class, one reverse-engineered local version, of which another may be launched this year), 10 recent Chinese-made FACs and 14 older French-made FACs, of which 4 have been locally upgraded. None of these warships appear to have CIWS, which could prove problematic in the event of missile attack. One advantage the IRIN does have is in submarines, notably 3 Kilos and a number of Ghadir class midget submarines, the latter being an unknown quantity. Factor in the new supercavitating torpedoes (apparently reverse-engineered from the Russian Skvall), and the Iranian subs are potentially troublesome. On the other hand, the Saudi frigates are ASW capable, so they aren't helpless.

There are a couple of ways in which Iran might credibly cause trouble for Saudi Arabia. One is with their ballistic missiles, the more recent of which are reputed to be capable of altering course in mid-flight, a factor which could complicate interceptions. Between the RSAF and RSAD (outside help aside), the Saudis have at least some protection. The other possibility, and much touted, is the Iranian Pasdaran (Revolutionary Guard) engaging in irregular warfare. This could include black ops against Saudi Arabia itself, or stirring up Shia groups to armed violence, Bahrain being a potential target.

TEHRAN (Reuters) - Iran has stopped selling crude to British and French companies, the oil ministry said on Sunday, in a retaliatory measure against fresh EU sanctions on the Islamic state's lifeblood, oil.

"Exporting crude to British and French companies has been stopped ... we will sell our oil to new customers," spokesman Alireza Nikzad was quoted as saying by the ministry of petroleum website.

The European Union in January decided to stop importing crude from Iran from July 1 over its disputed nuclear program, which the West says is aimed at building bombs. Iran denies this.

Iran's oil minister said on February 4 that the Islamic state would cut its oil exports to "some" European countries.

The European Commission said last week that the bloc would not be short of oil if Iran stopped crude exports, as they have enough in stock to meet their needs for around 120 days.

Industry sources told Reuters on February 16 that Iran's top oil buyers in Europe were making substantial cuts in supply months in advance of European Union sanctions, reducing flows to the continent in March by more than a third - or over 300,000 barrels daily.

France's Total has already stopped buying Iran's crude, which is subject to fresh EU embargoes. Market sources said Royal Dutch Shell has scaled back sharply.

Among European nations, debt-ridden Greece is most exposed to Iranian oil disruption.

Motor Oil Hellas of Greece was thought to have cut out Iranian crude altogether and compatriot Hellenic Petroleum along with Spain's Cepsa and Repsol were curbing imports from Iran.

Iran was supplying more than 700,000 barrels per day (bpd) to the EU plus Turkey in 2011, industry sources said.

By the start of this year imports had sunk to about 650,000 bpd as some customers cut back in anticipation of an EU ban.

Saudi Arabia says it is prepared to supply extra oil either by topping up existing term contracts or by making rare spot market sales. Iran has criticized Riyadh for the offer.

Iran said the cut will have no impact on its crude sales, warning that any sanctions on its oil will raise international crude prices.

Brent crude oil prices were up $1 a barrel to $118.35 shortly after Iran's state media announced last week that Tehran had cut oil exports to six European states. The report was denied shortly afterwards by Iranian officials.

"We have our own customers ... The replacements for these companies have been considered by Iran," Nikzad said.

EU's new sanctions includes a range of extra restrictions on Iran that went well beyond U.N. sanctions agreed last month and included a ban on dealing with Iranian banks and insurance companies and steps to prevent investment in Tehran's lucrative oil and gas sector, including refining.

The mounting sanctions are aimed at putting financial pressure on the world's fifth largest crude oil exporter, which has little refining capacity and has to import about 40 percent of its gasoline needs for its domestic consumption.

(Writing by Parisa Hafezi; Editing by David Cowell)

Iran has been talking about this since a couple days after Europe announced the embargo, but still not done it. The reason is pretty simple, every oil dollar counts and they can't just arbitrarily divert oil to other destinations without offering a price reduction. It will take actual time to sign contracts to get them full price, all the more so since China has been cutting back its Iranian imports in what many people believe is a ploy to force Iran into offering a discount. Meanwhile Libyan production keeps going higher. By discount we are talking 5-10%, not a radical reduction, but this would still be a very unwelcome loss for Iran. One also has to keep in mind in the background of all this, that not all oil is equal, and refineries are setup to take specific grades of crude from specific sources. So not just any oil company can sign up for Iranian oil, it has to have the free capacity in the proper refineries to do so.

Iran’s government has made provisions to meet consumer demand ahead of the Iranian New Year, Minister of Industries, Mines and Commerce Mehdi Ghazanfari said, advising Iranians against hoarding goods.

“Piling up goods at home isn’t to the benefit of consumers and we don’t advise it,” Ghazanfari said in Tehran without providing details, according to the official Islamic Republic News Agency.

Food sales usually rise toward the end of the fiscal year in preparation for Iranian New Year, which starts on March 20th. Given the fluctuations in Tehran’s foreign currency markets and volatility in the national currency’s value, Iranians may be purchasing even more this year, Ghazanfari said.

The move may be due to concern that prices may increase further. Iran’s December inflation rate was 20.6 percent. Iran has also come under additional sanctions from the European Union and the U.S., which are limiting its financial transactions and trade.

People are worried that prices are increasing and they are rushing to buy food items and store them, Mohammad-Reza Mortazavi, the head of the Iranian Association of Food Industry, said according to a report by the official Iranian Students News Agency on Jan. 27.

Iranian demand for fruit for the New Year’s period can fully be met with local production, Agriculture Minister Sadegh Khalilian said Feb. 6.

Unlike Iran, the US media is NOT state-controlled, with the exception of PBS.