Iran's oil

Iran's Supreme Leader Khamenei made some not so veiled threats today:

Iran’s Supreme Leader Ayatollah Ali Khamenei threatened on Sunday that the Islamic Republic may disrupt oil supplies in the region if the United States continued to pressure it to abandon its nuclear activities.

“If the U.S. makes a wrong move against Iran, energy flow in the region will be definitely put at serious risk”, Khamenei said in a speech aired on state television.

“You can never maintain security for [the flow of] energy in the region”, the Supreme Leader said in comments directed at the U.S.

This comes on the heels of efforts by Iran's toady in Venezuela, Chavez, at an OPEC meeting in Caracas last week to urge OPEC to cut back on production. OPEC was not real keen on the idea.

Oil-rich nations brushed off a push by Venezuelan leader Hugo Chavez to cut production, but he used the OPEC meeting to push for expanding the cartel´s membership and praised Bolivia´s nationalization of its natural gas industry.

Qatar´s oil minister, Abdullah al-Attiyah, said ahead of Thursday´s meeting that he did not believe output should be cut now, echoing comments by other important OPEC players.

But he said OPEC will be watching the situation between now and its next meeting in September, and could then change course.

Many other ministers said prices have shot ever higher because of events like nervousness over Iran´s nuclear weapons program, but insisted supplies are adequate even in the face of rising demand from countries like China and India.

"To tell you the truth, I won´t be surprised to see prices go even higher," the head of Libya´s oil policy, Shokri Ghanim, told reporters. "There are so many factors like geopolitics and speculation, so there is no reason why prices won´t go up."

Though Chavez has repeatedly said a cut is justified, he seemed to back off the effort in a speech Wednesday night, choosing to focus on South American energy politics instead of pressing anew for a reduction.

Iran knows it can hurt the West by squeezing the oil supply if attacked, but Iran would think long and hard about such a move. Iran's economy is not exactly on fire, and if oil revenues dropped significantly, Iran would feel the pinch. A crisis would become a stand-off to see who would capitulate first.