The Latest from Iran (26 January): Tehran Issues an Oil Warning

See also Syria Video Special: Free Syrian Army Captures Iranian Soldiers
Iran Feature: How Do You Cope with Award-Winning Director Farhadi?
An EA Special: Taking Apart Talk of "War With Iran"
Wednesday's Egypt, Syria (and Beyond) Live Coverage: A Year After the Uprising

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2109 GMT: An EA Special --- The Syrian Front. Some context for the claimed footage, posted on EA tonight of five Iranian soldiers who were captured by the Free Syrian Army while operating inside the country.

Hours before the footage was posted, Press TV reported, "A group of armed militants have attacked an Iranian bus on the road connecting the capital, Damascus, to the northwestern city of Aleppo."

Press TV said 11 male "pilgrims" were kidnapped and taken to an unknown destination, leaving behind the women.

The website further says, "The gunmen contacted the relatives of a kidnapped passenger in Tehran, confirming the abduction of the Iranian nationals and demanding a ransom."

No direct connection has subsequently been made to the claimed video.

2105 GMT: An EA Special. EA's Josh Shahryar has provided English subtitles to a video, in Farsi, that reportedly shows Iranian soldiers inside Syria who have been captured by the Free Syrian Army. Shahryar says that he is certain, based on their accents, that these men are Iranian.

See Syria Video Special: Free Syrian Army Captures Iranian Soldiers

1727 GMT: Oil Warning. Back to our opening item of the day --- Ali Akbar Velayati, former Foreign Minister and senior adviser to the Supreme Leader, has responded to the prospect of further sanctions, "In the absence of Iranian supply, oil prices will go up and they (the Western states) know it. However, Iran will never allow itself to be in a situation in which it cannot sell oil but other regional states can."

Strong words, but they still do not answer our question this morning: Will Tehran cut off oil to Europe immediately, rather than waiting for the European Union to arrange alternative supplies before its suspension of Iranian imports takes effect on 1 July?

1714 GMT: Elections Watch. Prominent conservative Habibollah Asgaroladi has asserted that March's Parliamentary elections are important and "should be a big feast" for Iranians. Encouraging full participation in the process, he said that reformists are "faithful to the law" and the system of velayat-e faqih (the rule of the Supreme Leader) should not be eliminated.

1419 GMT: Energy Watch. The Pakistan Foreign Ministry has said a proposed pipeline between Pakistan and Iran is not subject to international sanctions.

Spokesman Abdul Basit said, “Pakistan is committed to the Pak-Iran gas pipeline and sanctions do not cover this project.”

Basit asserted that Islamabad has repeatedly said that the nuclear issue of Iran should be resolved peacefully through negotiations and dialogue in the international community.

1414 GMT: Elections Watch. The first list of pro-Ahmadinejad candidates in March's Parliamentary elections has been published by the Islamic Academic Society. Most of those named are members of the Islamic Constancy Front, led by Ayatollah Mesbah Yazdi.

1354 GMT: Currency Watch. In another move by the Government to get control of the currency situation, the head of the Central Bank, Mahmoud Bahmani, has announced a single exchange rate of 12260:1 between the Iranian Rial and the US $, to come into effect from Sunday.

Bahmani warned that currency exchanges can only sell dollars in a band 3 to 5% above the rate; otherwise, they will lose their trading permits.

Currently, Iran has five different exchange rates, from the Central Bank's official rate of just over 11300:1 to the "unofficial" open-market rate of 17000:1.

Khabar Online is reporting that the Iranian Rial is trading at 17300:1 vs. the US dollar, a further strengthening of 10% from the "official" open-market rate of 19000:1 posted on Wednesday.

Mesghal has brought the rate down to 17000:1.

Etedaal reports the dollar is still at 19000:1 and foreign exchange traders are refusing to sell it at the Central Bank's "ordered" open-market rate of 14000:1

1251 GMT: All-Is-Well Alert. Leading politician and cleric Ali Fallahian has explained that no money has been lost in the $2.6 billion bank fraud, that public discussion of the luxury in which officials live is forbidden, and that the Islamic Republic is the most popular system in the world.

1244 GMT: Currency Watch. An EA source gives us the first indication that the Government's economic moves yesterday may be giving a significant boost to the Iranian currency: "A street currency dealer gave me a price of 1800 Toman (18000 Rials) to the dollar this morning....This might indicate that Ahmadinejad's upping of the interest rate has had an effect."

1238 GMT: Ahmadinejad Watch. Back from an academic break to find that the President has given a good-news speech in Rafsanjan in Kerman Province in southeastern Iran. He explained that the Islamic Republic has no econ problems and declared that people should not have to live in small houses.

For what's it worth, international media are preferring to focus on Ahmadinejad's statement, repeating his long-held line, that Iran is ready for nuclear talks with other powers; however, Tehran will not bow to international sanctions.

0708 GMT: Oil Watch. A bit of good news for Tehran on Wednesday, as India's Minister of Oil, S. Jaipal Reddy, said Delhi is continuing to buy oil from Iran, despite the European Union's decision this week to suspend Iranian import: "We, as a member of the UN, are obliged to follow UN sanctions. Other sanctions imposed by big blocs of countries -- we can have some freedom there. As of now, supplies are on."

However, sharp-eyed readers may notice the "As of now". The oil trade between India and Iran has been hindered since December 2010 over payment arrangements. To bypass the US dollar, New Delhi has suggested payment in rupees, but Iran --- worried that the rupee is not convertible on the international market --- has asked for part-payment in Japanese yen. Talks between Indian and Iranian officials last week did not appear to resolve the issue.

0705 GMT: Press Watch. Nikahang Kowsar comments on the recent wave of arrests of journalists in Iran, "Press Under Pressure":

0700 GMT: Currency Watch. Currency websites continue to put out the line that the Iranian Rial, strengthened by Wednesday's rise in interest rates, is trading vs. the US dollar at 19000:1. However, BBC Persian reports that, despite the claims, exchange offices are refusing to sell the dollar at 20000 Rials.

0630 GMT: The Battle Within. Mohsen Rezaie, 2009 Presidential candidate and Secretary of the Expediency, has renewed his campaign against the Government's handling of the economy.

On Tuesday, Rezaei said "officials must wake up" to an "economic war [which] has begun", proposing a four-point programme to deal with the economic turmoil. Yesterday he said about the currency crisis, "Ignorance, unprofessionality, and self-castigation have harmed people more than sanctions."

And MP Parviz Sorouri appears to be developing an anti-Ahmadinejad theme, "The deviant current has caused the currency turmoil to give people a hard time and to force the Islamic Republic's rulers to start talks with the US."

The President has been putting out signals for renewed discussions with Washington, especially over Iran's nuclear programme, since last autumn. That effort has escalated this month with the statements of the Foreign Ministry.

Sorouri said that, as the Government was not dealing with the currency crisis, Parliament must act.

0530 GMT: Assessing this week's European Union declaration that it will suspend oil imports from Iran beginning 1 July, an EA source said, "What Tehran needs to do is cut the oil now. Don't give the Europeans time to find other oil supplies. That will scare some of the European countries [e.g. Greece, Italy, and Spain, all of whom have significant levels of imported oil from Iran]."

To which I replied, "Sure. But does anyone in Tehran have the steel to do it?"

On Wednesday we got a hint of the possibility. Emad Hosseini, the spokesman for Parliament's Energy Committee, said the Majlis will prohibit the sale of oil to Europe, with the bill discussed on Sunday. Press TV props up the warning, with the help of the International Monetary Fund and Reuters, "Iran Oil Ban Will Up Oil Prices by 30%":

A paper published by the world body on Wednesday said the oil price hike would occur “if Iran halts oil exports as a result of US and European Union sanctions.” 

The IMF further stated that financial sanctions against Tehran may be "tantamount to an oil embargo" and would imply supply declines of about 1.5 million barrels per day from the world's fifth-largest oil producer. 

That volume of supply disruption, according to the IMF, would be comparable to losses in output from Libya last year due to civil war in that country which pushed oil prices over USD100 a barrel. 

The IMF had already highlighted the risks of a complete oil embargo on Iran in a note to deputies from G20 countries who met in Mexico City last week.