The average price of a gallon of regular unleaded dropped nearly a penny overnight to $3.455 on Wednesday, according to the AAA Daily Fuel Gauge Report.

Prices have plunged in recent weeks. This time a month ago the average in metropolitan Knoxville was $3.76, the auto club reported.

Memphis has the lowest average among Tennessee’s largest cities at $3.412, followed by Chattanooga at $3.416. Nashville has the highest average in the state at $3.486.

Meanwhile, the price of oil continues to decline on the expectation that world markets will be flush with extra supplies this year.

Benchmark U.S. crude on Wednesday fell by $1.17 to finish at a seven-month low of $92.81 per barrel in New York. Oil is down nearly 13 percent since the beginning of May.

Brent crude, which helps set the price of oil imported into the U.S., fell by 53 cents to finish at $111.71 per barrel in London.

Prices fell as a report showed that U.S. crude supplies had climbed to the highest level in 22 years. Supplies grew last week by 2.1 million barrels, according to the Energy Information Administration. That’s a bigger increase than analysts expected, and more could be on the way.

Japan’s Kyodo news agency reported that the U.S. will ask other countries to release spare oil reserves when the Group of Eight meets this Friday. The report follows rumors earlier this year that Western nations were planning a coordinated release of spare supplies.

The White House wouldn’t comment about the report.

Peter Donovan, a broker at Vantage Trading, said oil fell sharply in the afternoon as the Kyodo headline was passed around the New York Mercantile Exchange, where futures are traded.

Kyodo said President Obama will ask leaders of other G-8 countries — Britain, Canada, France, Germany, Italy, Japan, Russia — to make spare supplies available to refineries this summer. The release would be geared toward keep prices in check in July, when the European Union begins a ban on oil imports from Iran.

The U.S. and other industrialized countries tried a similar tactic last summer after the Libyan rebellion shut down that country’s oil fields. The move had only limited success, however. Oil prices fell temporarily but ended 2011 higher than they started.

Oil prices have been falling on signs that demand is cooling while supplies are building. Major oil producers like Saudi Arabia delivered more supplies to the world market. Meanwhile, data from the U.S. and China suggest economic growth is moderating, while Europe is teetering on recession.

If the eurozone cannot solve its debt problems, it will weaken an economy that consumes 18 percent of the world’s oil. It also could contribute to a global banking crisis that would hurt the U.S., China and other countries.

“It’s making a lot of guys nervous around here,” Donovan said.

At the pump, U.S. retail gasoline prices were flat at a national average of $3.73 per gallon, according to AAA, Wright Express and Oil Price Information Service. The price of a gallon of regular has held steady since Friday, though experts say the average pump price could fall as low as $3.50 per gallon by the Fourth of July.

In other energy futures trading, heating oil lost 3.54 cents to finish at $2.8976 per gallon, while wholesale gasoline fell dropped by 2.32 cents to end at $2.9209 per gallon. Natural gas rose by 11.8 cents to end at $2.618 per 1,000 cubic feet. Knox News

A FRESH warning about the health of the economy from the head of a global company weighed on the Australian dollar in Asia, although the currency still finished local trading higher yesterday.

Dow Chemical’s chief executive said he saw signs of a coming downturn in the Australian economy, arguing that jobs growth and overall competitiveness were in decline.

“We are seeing troubling signs for our economy at large — maybe even signs of a coming downturn,” Andrew Liveris said.

He said Australia’s current growth trajectory was “unsustainable” and the country had grown far too reliant on China for its prosperity.

The remarks sent the Australian dollar 20 pips lower. At 5pm AEDT, the dollar was trading at $US1.0530, up US0.82c from Monday, but off the $US1.0542 high earlier. The Aussie was at Y=87.178, up from Y=86.33. Earlier, a top central bank official said the value of the Australian dollar was having a “material influence on the economic outlook at the moment” and was being factored into policymakers’ deliberations.

Reserve Bank of Australia assistant governor Guy Debelle said the dollar’s current value was about where it should be given the prices paid for the nation’s exports.

“The exchange rate is in the ballpark of where you would expect it, given the rise in the terms of trade,” Mr Debelle said at a conference in Sydney.

But Reserve Bank board member Roger Corbett said the outlook for the domestic economy remained upbeat, even as some sectors struggled with the high exchange rate.

Looking ahead, dealers are facing a data-thin calendar. Speeches by US Federal Reserve officials will be in focus, as will US consumer sentiment. The Australian

The dollar eased to 83.30 yen in Tokyo, down from 83.87 yen in New York late Wednesday.

The euro was changing hands at $1.3238 and 110.27 yen, compared with $1.3211 and 110.22 yen on Wednesday.

Japan logged a trade surplus of 32.9 billion yen in February, after posting a record trade deficit in the previous month, according to data released just before trading started.

The figure beat market forecasts of a 110 billion yen deficit in February, according to a poll by Dow Jones Newswires and the Nikkei business daily.

Immediately after the data was announced, the dollar eased to 83.13 yen from 83.45 yen beforehand.

The dollar was rising on dip-buying but the upside was knocked by Japan’s trade figures, said Marito Ueda, senior managing director at FX Prime Corp.

“The dollar temporarily fell on the trade data, but that alone is not enough to change the upward trend in the dollar,” he told Dow Jones Newswires.

The dollar strengthened against other Asian currencies, rising to Sg$1.2640 from Sg$1.2633 on Wednesday, to 1,132.00 South Korean won from 1,128.60 won, and to 43.10 Philippine pesos from 43.05 pesos.

It also firmed to 9,188.00 Indonesian rupiah from 9,175.00 rupiah and to 30.77 Thai baht from 30.74 baht, while staying flat at Tw$29.54. The Times of India

The S&P/ASX200 ended the day off 15.3 points, or 0.4 per cent, at 4196.7, while the All Ords lost 12.3 points, or 0.3 per cent, to 4288.2.

Among the main sub-indexes, telcos fell 0.9 per cent (with Telstra down by 3 cents), while financials gave up 0. per cent and energy stocks off 0.55 per cent. Materials were basically flat.

Investors sat on their hands ahead of a raft of US economic data later in the week, while figures showing a  big widening of China’s trade deficit weighed on the local bourse.

China’s February trade data revealed a $US31.5 billion deficit, compared to expectations of a $US4.9 billion ($4.6 billion) deficit.

China is Australia’s top trade partner and the largest consumer of its resources. Signs that its economy is slowing have raised concerns for investors in companies with a large exposure to China.

Mid-sized resource firms were the worst hit on worries that China’s voracious demand for metals and commodities could be tempered in a slowdown.

Ord Minnett investment adviser Francesco De Stradis said the market should not have been surprised by the widening.

‘‘The pare-back in their growth was telegraphed last year when they put out their five-year plan  … so it shouldn’t be any surprise.‘‘But the market’s obviously seen that as somewhat of a negative … so that is probably an over-reaction.’’

The impact of Friday’s solid US jobs growth numbers on the market had been lessened by the weekend, while Greece’s potential for default was ‘‘just a sideline event’’, Mr De Stradis said.

All eyes will turn to the Federal Open Markets Committee decision-making arm of the US Federal Reserve when it meets in the United States on Tuesday.

Locally, market heavyweight BHP Billiton was steady at $34.71, while iron ore player Fortescue Metals Group surged 22 cents, or 3.9 per cent, to $5.86. Rio Tinto fell 39 cents, or 0.6 per cent, to $63.74, and oil and gas producer Oil Search slipped 11 cents, or 1.54 per cent, to $7.04.

Major banks lost ground, with National Australia Bank leading the sector lower after finishing down 22 cents, or 0.9 per cent, to $23.34. Macquarie Group gained 45 cents, or 1.7 per cent, to $26.25.

Other bright spots included David Jones, which firmed four cents to $2.73, and News Corp which rose 21 cents, or 1.13 per cent, to $18.86.

Grains marketer Graincorp surged 34 cents, or 4.2 per cent, to $8.44 on market speculation of a takeover bid. That followed news that commodities giant Glencore International made a $5.2 billion tilt for Graincorp rival Viterra, which has extensive Australian operations.

Qantas lost 2.5 cents to $1.655 after maintenance workers employed by one of the airline’s contractors started picketing  Brisbane airport over a wages dispute.

Stockland securities eased three cents to $3.05. The property group on Monday acquired control of the Centro Townsville shopping centre for $36.5 million.

National turnover was 1.6 billion securities worth $3.6 billion, with 451 stocks up, 504 down and 375 unchanged. Canberra Times

“Iran warns Europe it will find other customers for its oil,” the Islamic Republic News Agency said. “European people should know that if Iran changes destinations of the oil it gives to them, the responsibility will rest with the European governments themselves.”

Last month the European Union decided to impose an oil embargo on Iran as of July 1 as part of a coordinated campaign of Western sanctions aimed at pressuring Iran to halt its disputed uranium enrichment program, and the Europeans have been making arrangements since then to find other sources.

The European Union has been one of Iran’s biggest markets for oil, taking about 18 percent of total Iranian petroleum exports in 2011. Among the European Union members, the biggest buyers have been Italy, Spain and France.

Iran forecasted in December that a cutoff of Iranian oil could double the global price. But a combination of lower demand because of European economic weakness and ample sources of supply elsewhere have helped cushion the anticipated effects of both the planned embargo and Iran’s threat to stop exporting oil to Europe well before the embargo starts.

Saudi Arabia, the top producer in the Organization of Petroleum Exporting Countries, has said it could compensate for much of the shortfall from Iran, which is OPEC’s second-largest producer. And resurgent production from Libya, long crippled by the conflict there last year, has further added to the total global supply.

The relatively mild effects of the Iranian threat on Wednesday were reflected on prices at the New York Mercantile Exchange, where the March-delivery price for oil closed up $1.06 a barrel on Wednesday to $101.80, a gain of 1 percent.

The impact of sanctions, including severe restraints on Iran’s ability to conduct routine banking and shipping operations, have caused severe disruptions to Iran’s economy as the nuclear program remains an increasingly acrimonious issue between Iran and the West.

The Iranian warning came on a day of mixed messages emanating from Iran’s hierarchy about its nuclear program, which Western nations and Israel have called a cover for Iranian attempts to become capable of making a weapon. Iran has said the program is peaceful.

At the same time Iran was warning its biggest European oil buyers, it also announced it was willing to reopen nuclear talks suspended a year ago in a letter to Catherine Ashton, the European Union’s top foreign policy official. The Iranians also announced new advances in their nuclear program, including escalation of Iran’s enrichment practices, which if accurate could serve to further aggravate tensions.

A spokeswoman for Ms. Ashton confirmed receipt of a letter from Dr. Saeed Jalili, who heads Iran’s Supreme National Security Council, sent in response to a letter from Ms. Ashton in October of last year. The spokeswoman, Maja Kocijancic, did not disclose the contents but said “we are carefully studying the letter.”

The Iranian side also did not reveal the letter’s contents, but the Islamic Republic News agency paraphrased Mr. Jalili as saying in the letter that “returning to the negotiation table would be the best means to broaden cooperation between the two sides.”

In Tehran, President Mahmoud Ahmadinejad presided over ceremonies to mark advances in Iran’s nuclear program, partly to project an image of Iranian defiance against the Western sanctions. The new advances include centrifuges that Iran said were capable of enriching uranium at a much faster rate, and the insertion of the first domestically produced nuclear fuel rod into a nuclear reactor in Tehran.

“The era of bullying nations has past,” Mr. Ahmadinejad said in a televised broadcast of the ceremony. “The arrogant powers cannot monopolize nuclear technology. They tried to prevent us by issuing sanctions and resolutions but failed.”

Iran’s nuclear announcements came as tensions have escalated in particular with Israel, which regards Iran as an existential threat and has hinted at the possibility of a pre-emptive military strike on Iran’s nuclear facilities to forestall its suspected ambitions.

Iran has accused Israel, a nuclear weapons state, of responsibility for a clandestine campaign aimed at sabotaging Iran’s nuclear ambitions, including the assassinations of at least four Iranian scientists since 2010. Israel has counter accused Iran in recent days of retaliatory plots aimed at Israeli targets in Georgia, India and Thailand, which Iran has denied. By Rick Gladstone and Alan Cowell, The New York Times

Quoting the official news agency, The New York Times reports that Ahmadinejad will likely “proclaim that a new uranium enrichment plant built inside a mountain near the holy city of Qum was ‘fully operational.’”

The Times adds:

    “The announcement appeared timed to convey the defiant message that the increasingly harsh Western economic sanctions imposed on Iran were having no effect on the government’s determination to proceed with its nuclear program. The United States, Europe and Israel have all called the program a cover for Iranian efforts to develop nuclear weapons capability, an accusation that Iran denies.

    “The new uranium enrichment plant, known as Fordo, has raised Western concerns because it is buried deep underground, making it more impervious to scrutiny. The Fordo plant also has elevated distrust of Iran because the plant’s construction had been kept a secret until Western intelligence confirmation of its existence forced the Iranians to acknowledge the plant in September 2009, just as President Obama and European allies were announcing it. The Iranians said at the time that they had always intended to reveal the plant’s existence.”

The BBC reports that senior national security official Ali Baqeri noted that Iran will also load Iranian-made nuclear fuel rods into the Tehran Research Reactor. The BBC makes much the same point as the Times: About two years ago talks to provide Iran with rods for the reactor collapsed and this announcement was likely meant to send the West a message that the sanctions will not deter Iran from trying to “master nuclear technology on its own.”

Now, it’s important to note that announcements of this kind by Iran have in the past amounted to empty boasts.

Also of note is that Iran is set to meet with the International Atomic Energy Agency in Tehran on Feb. 20 and 21. Reuters reports that the IAEA has been working its diplomatic channels to try to convince Tehran to be more transparent about its nuclear activity.

Update at 7:29 a.m. ET. Ahmadinejad Makes Announcement:

The AP and Reuters are reporting that President Ahmadinejad just made the announcement that the Tehran reactor has been loaded with domestically produced nuclear fuel rods. By Eyder Peralta, NPR

The answer, according to Consumer Reports Money Adviser, is that this is one of those situations in life where there are things we can control and others we can’t. And we might as well not mess up the former.

In that spirit, here are seven common mistakes most of us can avoid if we choose to:

– Not having a plan. Many of us reach middle age with little more than a vague notion of our plans for retirement. At a minimum, all of us ought to have at least a best-guess estimate of (a) how much money we’ll need to retire, and (b) how much we’ll have to save and invest each year to get there. Also worth considering: (c) how we plan to use our time and energy in retirement.

– Not having alternative plans. These days one plan is no longer enough. You might plan to retire early, late or never, but your employer might have different ideas. So it makes sense to have at least a plan B and possibly a C, D and E. For example, what would happen if you had to retire before age 65, when Medicare eligibility begins? What if you find yourself supporting an adult child? What if you plan to sell your house but the real-estate market collapses?

– Not knowing what you’ve got. Part of any planning exercise should be a thorough inventory of investments. Besides retirement accounts, many of us have picked up an assortment of other assets over the years: shares of an ex-employer’s stock, a bit of leftover cash in a child’s 529 college savings plan — you name it. The result of sorting it all out could be a pleasant surprise.

– Underfunding accounts. Each year we don’t put as much money as we can into 401(k)s and similar tax-deferred plans, we’ve missed an opportunity. This year the limits on 401(k) contributions have risen to $22,500 for anybody over 50 and $17,000 for everybody else. Consumer Reports Money Adviser notes that it’s worth contributing as much as you can, especially if you’re entitled to an employer match.

– Wimping out on risk. There’s a sudden aversion to risk among many new retirees. With any luck, most of us could be retired for three or four decades, and a portfolio consisting of “safe” investments like CDs and Treasuries is unlikely to keep pace under even modest inflation. With inflation recently running at 3.9 percent and five-year CDs yielding an average of 1.2 percent before taxes, overly cautious retirees can lose ground pretty fast.

– Ignoring fees. Many of us were outraged recently, and rightly so, when banks started hiking debit card fees and other charges. But we seem to have resigned ourselves to retirement plan fees, which can be just as dastardly and far less transparent. In one illustration provided by the U.S. Department of Labor, a 401(k) plan charging 1.5 percent a year left a participant with 28 percent less money after 35 years than a similarly performing one charging 0.5 percent. You also need to be aware of fees on investments outside your retirement accounts.

– Depending on home equity. It’s best not to count home equity in your net worth unless you plan to sell your house and are absolutely certain how much profit you’ll walk away with. Consumer Reports Money Adviser suggests looking at home equity as a form of insurance in case your other retirement projections don’t work out exactly as planned. And given the world we live in now, that’s a possibility. Hartford Courant

Two British and French warships and the American aircraft carrier USS Abraham Lincoln had entered the Gulf on Sunday to show Tehran they would not tolerate any interference with global shipping, Philip Hammond told reporters.

Iranian leaders have repeated long-standing threats to close off the Strait, which handles a fifth of the world’s oil, after the EU imposed the embargo Monday as part of sanctions to pressure Tehran into resuming talks on the country’s controversial nuclear program.

Iran summoned the Danish ambassador to Tehran on Tuesday over the EU’s oil embargo; Denmark is currently the head of the rotating EU presidency.

“Elements within the European Union, by pursuing the policies of the U.S. and adopting a hostile approach, are seeking to create tensions with the Islamic Republic of Iran,” the official IRNA news agency quoted Ali Asghar Khaji, a senior Foreign Ministry official, as saying. He called the EU decision “irrational” and “without logical justification.”

Other Iranian officials argued the sanctions would not work, or could even benefit Iran.

“The oil embargo will lead to higher prices. Europe will be the loser and Iran will earn more because of high prices,” Iran’s oil ministry spokesman Ali Reza Nikzad Rahbar told state TV.

During talks in London on Tuesday, Australia said it would also sign up to the embargo — though acknowledged it currently has negligible oil imports from Iran.

The three warships — which included Britain’s HMS Argyll frigate and France’s frigate La Motte Picquet — that entered the Gulf on Sunday had sent “a clear signal about the resolve of the international community to defend the right of free passage through international waters,” Hammond said.

“We also maintain mine-counter measures vessels in the Gulf, which are an important part of the overall allied presence there, and of course the U.K. has a contingent capability to reinforce that presence should at any time it be considered necessary to do so,” he said.

Britain’s defense ministry declined to offer specific detail on what assets and personnel are currently in the Persian Gulf, but said it had about 1,500 Navy personnel in the region east of Suez, which includes the Middle East and Indian Ocean.

Four anti-mine vessels are based out of Bahrain, while Britain also has two frigates — including HMS Argyll — three support ships, a survey vessel and one hunter-killer nuclear submarine in the region, the ministry said.

In Paris, French military spokesman Col. Thierry Burkhard said the French warship, which specializes in countering submarine attacks, has since separated from the British and American warships, but remains on a “presence mission” in the Persian Gulf.

France doesn’t have plans to deploy more forces to the zone, said Burkhard, noting that France has a small base in the United Arab Emirates, which currently houses six Rafale warplanes and about 650 troops, including an infantry battalion.

The United States and allies have already warned they would take swift action against any Iranian moves to choke off the 30-mile (50-kilometer) wide Strait of Hormuz.

At the center of the dispute is international concern over Iran’s nuclear program, which Tehran insists is aimed at providing civilian power. The U.S. and other nations accuse Iran of attempting to build nuclear weapons, and Tehran is now under several rounds of U.N. sanctions over its failures to be forthcoming about its work.

Hammond said recently that Iran was “working flat out” to produce a nuclear weapon.

Australia’s foreign minister Kevin Rudd, in London with Australian defense minister Stephen Smith for talks with British counterparts, said his country would join the EU’s oil embargo.

“We in Australia will undertake precisely the same parallel actions in Australia,” Rudd said. “The reason is very clear — the message needs to be delivered to the people of Iran, the wider political elites of Iran, as well as the government of Iran that their behavior is globally unacceptable.”

Iran responded angrily to the new EU sanctions Monday, with two lawmakers escalating threats that their country would close the Strait of Hormuz. Lawmaker Heshmatollah Falahatpisheh said Iran had the right to shutter Hormuz in retaliation and that the closure was increasingly probable, according to the semiofficial Mehr news agency.

“In case of threat, the closure of the Strait of Hormuz is one of Iran’s rights,” Falahatpisheh was quoted as saying. “So far, Iran has not used this privilege.”

Some commentators are declaring that Iran should cut the flow of crude even before the new measures go into effect in July, to punish Europe, while others say the embargo is a “gift” which will allow the country to diversity its economy.

“Ineffective Western sanctions are not a threat to us, but an opportunity that has brought a lot of benefits,” Moslehi said at a gathering in the central city of Isfahan late Monday.

The measures, approved in Brussels by the EU’s 27 foreign ministers, include an immediate embargo on new contracts for crude oil and petroleum products. Existing contracts with Iran will be allowed to run until July.

Iran’s Oil Ministry said the country can find new markets.

“Iran can easily find new customers for its oil,” Mohsen Qamsari, a senior ministry official, was quoted by the semiofficial Mehr news agency as saying.

Some 80 percent of Iran’s foreign revenue comes from oil exports, and analysts say that any sanctions affecting its ability to export oil would hit its economy hard. With about 4 million barrels per day, Iran is the second largest producer in OPEC. It exports about 2 million barrels a day and consumes the rest domestically.

The EU has been importing about 450,000 barrels of oil per day from Iran, making up 18 percent of Iran’s oil exports.

Some in Iran said the country should stop selling oil to Europe now, instead of July, to punish the bloc before it can find suppliers to replace Iranian crude oil in the midst of winter. CBS News

IBM’s lithium-air batteries, which have more than 1,000 times the energy density of typical lithium-ion batteries, could push the range to 500 miles, New Scientist reports.

That would solve one of the major barriers that electric-vehicle manufacturers face in attracting a large-scale customer base. Current technology provides a range of only about 100 miles before the vehicle needs to be charged again.

The lithium-air batteries are under development in San Jose, Calif., at IBM’s Almaden research lab, according to New Scientist, a news website. If all goes well, the batteries could be released commercially in 2020.

For now, Amp is hoping smart use of current technology will earn it a top spot in the electric-car industry, as the Business Courier reported Friday. The early-stage company converts popular vehicles such as the Jeep Cherokee and Mercedes-Benz ML 350 to electric power.

Amp has a deal to supply 1,000 vehicles to an Icelandic company over several years. But keeping the company operating until revenue starts arriving means a fundraising treadmill. And selling substantial numbers of electric vehicles will require convincing consumers that they won’t be making any sacrifices. By James Ritchie, Business Journal

The comments by Iran’s OPEC governor, published Sunday, came as Saudi Arabia’s oil minister was quoted the same day denying that his country’s earlier pledges to boost output as needed to meet global demand was linked to a potential siphoning of Iranian crude from the market because of sanctions.

World oil markets have been jolted over concerns that Iran may choke off the vital Strait of Hormuz in retaliation for sanctions hampering its ability to sell its oil. Saudi Arabia and other key Gulf Arab producers have recently said they are ready to provide stable and secure supplies of oil.

The U.S. recently imposed sanctions targeting Iran’s central bank and, by extension, refiners’ ability to buy and pay for crude. The European Union is also weighing an embargo on Iranian oil, while Japan, one of Iran’s top Asian customers, has pledged to buy less crude from the country.

Mohammad Ali Khatibi, Iran’s OPEC governor, was quoted Sunday by the pro-reform Shargh newspaper as saying that attempts by Gulf nations to replace Iran’s output with their own would make them an “accomplice in further events.”

“These acts will not be considered friendly,” Khatibi said, adding that if the Arab producers “apply prudence and announce that they will not participate in replacing oil, then adventurist countries will not show interest,” in the embargo.

The embargo concerns are linked to Iran’s nuclear program. The West maintains Iran is enriching uranium for weapons purposes while Tehran says its program is for purely peaceful purposes such as generating electricity.

Saudi Arabia, the world’s largest oil producer and a close U.S. ally, had said that it was ready to raise its output to accommodate global market needs. The country is the only member of the 12-nation Organization of the Petroleum Exporting Countries that has significant spare capacity, currently estimated at roughly more than 2 million barrels per day.

With concerns building amid the standoff between Iran and the West over Tehran’s nuclear program, a string of Asian and Western officials have visited Saudi Arabia over the past week. While offering assurances that it could meet a shortfall in supply through its spare capacity, Saudi officials have also been careful to say that it was an internal matter if nations chose to abide by any sanctions.

Oil Minister Ali Al-Naimi appeared to try to further clarify the country’s position in comments published Sunday in the daily Al-Ektisadiyah newspaper.

“We never said that Saudi Arabia is trying to compensate for Iranian oil in the case that sanctions (are enacted),” Al-Naimi was quoted as saying. “We said that we are prepared to meet the increase in global demand as a result of any circumstances.”

The kingdom has a production capacity of 12.5 million barrels and is believed to be producing slightly over 9 million to 9.5 million barrels per day.

Iran’s warning introduces a new layer of complication to an issue that has the potential for broad regional and global fallout.

“If the regional countries … say no to what is harmful to the security of the region, then nothing will definitely happen,” he said. But if the security of oil traffic in the Strait of Hormuz is violated, “all will be lost,” he said.

“If these countries make a mistake and give the green light, this will be a historic green light,” Khatibi said.

Saudi Arabia, the Arab world’s largest economy, is widely seen as the main counterweight to Iran in the region. Any attempt by Iran to close the Strait of Hormuz, through which a sixth of the world’s oil flows, would also affect the export abilities of the major Gulf producers, including Saudi Arabia, Iraq, the United Arab Emirates, Kuwait and Qatar.

While momentum appears to be building for the sanctions by the West, China, another major buyer of Iranian oil, has come out against the measures.

Chinese Premier Wen Jiabao was in Saudi Arabia on Saturday for meeting with officials in which the two countries “pledged to work together to further expand all-around exchanges and cooperation,” according to China’s Xinhua news agency

Wen said the two sides “should expand trade of crude oil and natural gas and energy-related cooperation as to deepen their energy partnership,” Xinhua reported.

During the visit, Saudi state-owned oil giant Aramco and Chinese refiner Sinopec finalized an agreement to develop a 400,000 barrel per day joint venture refinery in the Red Sea city of Yanbu. The deal is just one between China and Gulf producers as the Asian powerhouse reaches out across the world to secure energy supplies for its booming economy. By Tarek El-Tablawy, my SA