(Updates with comment from EU in third paragraph, analyst comment in fourth.)
Jan. 2 (Bloomberg) -- Iran produced its first nuclear fuel rod, state-run news agencies reported, as the country offered to restart international talks over its atomic program.
The domestically made rod was inserted into the core of Tehran’s atomic research reactor after performance tests, the Iranian Students News Agency reported, citing the country’s atomic energy agency. The Tehran reactor produces radioisotopes for cancer treatment, according to Mehr news agency. Nuclear fuel rods contain pellets of enriched uranium that provide fuel for nuclear power plants.
The U.S. and allies are increasing pressure on Iran to halt what they say may be a covert nuclear weapons program. Sanctions signed into law by President Barack Obama on Dec. 31 aim to deter dealings with the Iranian central bank. The European Union, which is considering a ban on imports of oil from Iran, will be ready by Jan. 30 to take a decision on extending sanctions, Michael Mann, a spokesman for the EU, said today in an e-mailed statement. Iran, the world’s third-largest oil exporter, denies seeking to develop atomic weapons.
“If Iran has indeed produced its first nuclear fuel rod using its own domestic capabilities that would represent progress in its program, as just last year there was significant doubt they had that ability,” Meir Javedanfar, lecturer on Iranian politics at the Herzliya Interdisciplinary Center in Israel, said in a phone interview. “It is possible though that this is part of the psychological warfare launched by Iran against what they see as the tough economic sanctions being placed against it by the U.S.”
The country’s top nuclear negotiator, Saeed Jalili, plans to send a letter to European Union foreign policy chief Catherine Ashton, which may be followed by a new round of talks, Mehr reported on Dec. 31, citing Iran’s ambassador to Germany, Alireza Sheikh Attar.
Mann said on Dec. 31 that Ashton hadn’t received a response to a letter sent to Jalili in October. The EU continues to pursue a “twin-track approach” and is “open for meaningful discussions on confidence-building measures, without preconditions from the Iranian side,” Mann said Dec. 31.
Iran began 10 days of naval exercises on Dec. 24 in the Strait of Hormuz, a waterway that carried 17 million barrels of oil a day last year, or a third of the world’s seaborne oil trade according to the U.S. Energy Department.
The navy test-fired its long-range Qader surface-to-sea missile for the first time during the military drills, the Islamic Republic News Agency reported today, citing the deputy commander of the navy, Mahmoud Mousavi. The country’s navy plans to test-fire two other missiles today, he said.
Crude futures surged to a three-week high of $101.77 a barrel on Dec. 27 after the Islamic Republic News Agency cited Vice President Mohammad Reza Rahimi as saying the country would bar shipments through the strait if sanctions are imposed on its oil exports. They dropped to $98.83 a barrel on Dec. 30.
Iran produced 3.56 million barrels a day in November, according to data compiled by Bloomberg. Saudi Arabia, holder of the world’s biggest crude reserves, has spare capacity to pump an extra 2.45 million barrels a day and the remaining Gulf Arab members of the Organization of Petroleum Exporting Countries can provide about 200,000 more, the data show.
--With assistance from Jones Hayden in Brussels and Calev Ben- David in Tel Aviv. Editors: Shaji Mathew, Ben Holland, Louis Meixler.
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