Iran's threat to deny oil to Japan could help US sanctions strategy

Iran may be tripping over its own revolutionary priorities and, in effect, playing into President Carter's hands in its threat to suspend oil sales to Japan over a pricing dispute.

Oil revenues support Iran's otherwise shattered economy. Japanese companies buy about a half-million barrels of Iranian crude a day -- a hefty chunk of exports variously estimated at between 1 million and 2 million barrels.

Should Iran follow through on the threatened export cutoff to Japan, it could forfeit millions of dollars in revenues on a gradually easing world oil market.

Yet diplomats point out the move could also nudge Japan closer to the US on the question of sanctions against Iran over the hostage-holding at the US embassy.

Japanese diplomats, while stressing that the pricing issue is purely economic , acknowledge that it could have political implications.

"We could take advantage of the oil issue to move in concert with the Europeans" toward gradually heightened pressure on Iran, one Japanese diplomat commented privately. "We'll just have to wait and see."

European Community states began two days of talks April 21 on the issue of sanctions against Iran. The Europeans were widely expected to defer economic pressure, but cut or curtail diplomatic relations with Iran as a first step in leaning on the Tehran government.

According to Reuters, Iran had suspended oil shipments to Japan April 21 because of its refusal to meet Tehran's demands for a $2.50 per barrel hike in Iranian oil prices. Japanese sources said the companies negotiating with Iran had rejected the new $35-a-barrel price tag, the highest in the Gulf region.