TEHRAN, Jan 20: Embroiled in a nuclear standoff with the West, Iran said on Friday it was moving funds out of Europe to shield them from possible UN sanctions and flexed its oil muscles with a proposal to cut OPEC output.

“Yes, Iran has started withdrawing money from European banks and transferring it to other banks abroad,” said a senior Iranian official.

Central Bank Governor Ebrahim Sheibani was quoted earlier as saying Tehran had started shifting funds, but he sidestepped a question on whether the assets would go to accounts in Asia.

Financial markets reacted nervously to the uncertainty about Iran’s foreign holdings, estimated at more than $30 billion, helping send oil to a four-month high above $67. The dollar dipped against the euro and the safe-haven Swiss franc.

It is far from clear how placing assets in Asia or anywhere abroad would protect them from being frozen as few governments or major banks would be willing to flout UN sanctions openly.

Talk of shifting foreign assets indicates how seriously Tehran is taking the threat of UN sanctions.

Iran has bitter memories of its US assets being frozen shortly after the 1979 revolution.

The United States and the European Union want the International Atomic Energy Agency (IAEA) to refer Iran to the Security Council at an emergency board meeting on Feb 2.

The council has the power to impose trade or diplomatic sanctions, though no swift action to punish Iran is likely.

Russia, China and India, which all have major commercial interests in Iran, have urged caution.

Anxious to maintain neutrality, IAEA chief Mohamed ElBaradei has refused an EU request to speed up a report on Iran’s atomic activities in time for the Feb 2 meeting, diplomats said.

Officials close to the IAEA said Mr ElBaradei also felt Western pressure to refer Iran to the Security Council at the meeting was premature. Diplomats said he had promised the Iranians they would have until the next regular IAEA board on March 6 to meet his demand for better access to nuclear sites and documents.

A US official denounced Iran as a threat to regional and global peace and said it had breached international law.

“Iran has overstepped the bounds of international law in seeking to use its facility at Natanz for centrifuge research and enrichment,” Undersecretary of State Nicholas Burns told a news conference in New Delhi after meeting Indian officials.

Worries over Iran helped push oil above $67 on Friday and an Iranian proposal to slash a million barrels a day from OPEC production from April was not calculated to calm markets.—Reuters