Iran playing chicken with West on crude oil price

As tensions continue to rise between Iran and western countries, an Iranian ministry spokesman warned crude oil prices could double if an oil embargo is imposed on the country.

Foreign ministry spokesman Ramin Mehmanparast said an oil embargo would cause crude oil prices to swell to more than $250, crippling a fragile global economy, according to a Reuters.

“As soon as such an issue is raised seriously the oil price would soar to about $250 a barrel,” Mehmanparast said in a Shargh newspaper interview.

Tensions have been rising between Iran and Western powers over the country’s nuclear program, prompting the European Union and the U.S. to consider strong sanctions against the large crude oil exporter.

The U.S. Senate voted last week to impose new sanctions on the country’s central bank and barring companies that do business with the bank from opening operations in the U.S.

EU foreign minister issued their own sanctions on Friday, but they stopped short of an oil embargo on the country. EU foreign policy chief Catherine Ashton told The Wall Street Journal that an embargo was still “being debated.”

Oil prices climbed to near $102 a barrel today in Asia as the markets reacted to the new sanctions against Iran, the world’s third-biggest oil exporter at 2.2 million barrels per day.

European refiners said it was too early to comment on the consequences of a possible oil embargo. One refinery, Saras SpA, told The Journal that it didn’t “anticipate any supply problems” and wouldn’t reduce capacity if an embargo happened.

If an embargo did happen, refineries would likely see tighten margins, similar to what they saw during the Libyan civil war.