"If they [the west] impose sanctions on Iran's oil exports, then even one drop of oil cannot flow from the strait of Hormuz," the official Iranian news agency IRNA quoted Iran's first vice-president, Mohammad Reza Rahimi, as saying.
E.U. ministers said on December 1 that a decision on further sanctions would be taken no later than their January meeting. E.U. countries take 450,000 barrels a day of Iranian oil, about 18% of its exports.
China, the biggest buyer of Iranian crude, has warned against "emotionally charged actions" that might aggravate tension in the nuclear standoff with Iran.
Russia for its part has warned against "cranking up a spiral of tension", saying this would undermine the chances of Iran co-operating with efforts to ensure it does not build atomic bombs.
About a third of all sea-borne oil was shipped through the strait of Hormuz in 2009, and U.S. warships patrol the area to ensure safe passage.
Most of the crude exported from Saudi Arabia, Iran, the United Arab Emirates, Kuwait and Iraq must slip through the strait, a four-mile wide shipping channel between Oman and Iran.
Some analysts say Iran would think hard about sealing off the strait as it could suffer just as much economically as western crude importers.
Industry sources said Saudi Arabia and other Gulf OPEC states were ready to replace Iranian oil if further sanctions halted Iranian crude exports to Europe.
Iranian Oil Minister Rostam Qasemi had said that Saudi Arabia had promised not to replace Iranian crude if sanctions were imposed.
"No promise was made to Iran, it's very unlikely that Saudi Arabia would not fill a demand gap if sanctions are placed," said an industry source familiar with the matter.
Gulf delegates from OPEC said an Iranian threat to close the strait would harm Tehran as well as the major regional producers that also use the world's most vital oil export channel.
"If the sanctions take place the price of oil in Europe would increase and Saudi and other Gulf countries would start selling there to fill the gap and also benefit from the higher price," said an industry source, who declined to be named.
Brent crude oil futures jumped nearly a dollar to over $109 a barrel after the Iranian threat, but a Gulf OPEC delegate said the effect could be temporary.
"For now, any move in the oil price is short-term, as I don't see Iran actually going ahead with the threat," said the delegate.
Intellpuke: You can read this Reuters article, in context here: www.guardian.co.uk/world/2011/dec/27/iran-oil-exports-hormuz-sanctions
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