Iran warns Gulf nations against boosting oil production

Iran has warned Gulf nations against boosting their oil production saying they will be responsible for the consequences of any such move. The warning comes as the US and European Union have been seeking to curb Iran's oil exports. Leaders from various nations are travelling to the region in a bid to seek extra supplies to offset any shortfalls. Iran has warned of retaliation against any output increase. According to the Sharq daily newspaper, Mohammad Ali Khatibi, Iran's representative to Opec, said that "our Arab neighbour countries should not co-operate" with the US and European countries. He added that any measures taken by the countries would not be perceived as "friendly", adding that if they give "the green light to replacing Iran's oil these countries would be the main culprits for whatever happens in the region - including the Strait of Hormuz". Asian nations are amongst the biggest buyers of Iranian oil, with China, India, Japan and South Korea accounting for almost 50% of all of Tehran's shipments. The US has been seeking the support of these countries in a bid to reduce Iran's oil exports as part of sanctions against the country. However, given the speed with which their economies are growing, especially those of China and India, these nations require large quantities of oil. As a result any cuts in imports from Iran will have to be substituted by an increased supply from other sources. That has seen leaders and policymakers from the region heading to the Middle East in a bid to secure extra supplies. Chinese Premier Wen Jiabao has held talks with King Abdullah of Saudi Arabia, China's biggest oil supplier. At the same time, South Korea's President Lee Myung-Bak visited the region over the weekend, meeting leaders in Oman and the United Arab Emirates to discuss oil supplies. "They would like to secure extra oil supplies in the event they have to comply with the oil embargo," Ker Chung Yang, an investment analyst at Phillip Futures told the BBC's Asia Business Report. Though Asian nations have yet to announce any cuts in their imports from Iran, there have been fears of a shortfall in supplies. "In the event any oil embargo is imposed on Iran, Asia is likely to feel the oil supply shortage in the short term," said Mr Ker of Phillip Futures. The fear is that if supplies from Iran are hurt and are not substituted from another source, it may may result in higher oil prices. Should oil costs rise significantly, then it would put pressure on consumer prices in the region, creating fresh problems for policymakers who have been trying to rein in inflation for the best part of the last year. "For the Asia economies, a sustainable and continuous oil supply coming from the Middle East is very important," Mr Ker added.