Iran makes £55 million from hostage crisis as oil prices soar

Since Iran's Revolutionary Guards seized the Britons 11 days ago, the price of oil has soared 10 per cent, reaching six-month highs of $66 per barrel in New York last week.

According to OPEC figures, Iran exports 2.3 million barrels of oil per day, meaning Tehran has profited from the crisis by up to 5 million a day. By the end of today, the extra cash it has raked in could total 55 million.

While the oil price has risen, the public pressure on Iran was lowered yesterday as more conciliatory stances were adopted.

Des Browne, the Secretary of State for Defence, said the UK government was holding bilateral talks with Iran over the detainees, who were seized in the Persian Gulf on 23 March.

"We are anxious that this matter be resolved as quickly as possible, and that it be resolved by diplomatic means and we are bending every single effort to that," he said.

And speaking to the BBC, Douglas Alexander, the Scottish Secretary, said:

"The responsible way forward is to continue the often unglamorous but important and quiet diplomatic work."

Iran also seemed to signal that a compromise could be possible after Manouchehr Mottaki, the country's foreign minister, said he was examining a letter from the British Foreign Office about the hostages.

"This note contains many points which will be considered," he said. "However, we are waiting for a change in the attitude of the British and a moderate approach by this country towards Iran's legal requests."

The Foreign Office is said to be considering offering Iran a way out without losing face over the crisis. One strategy discussed at a meeting of Whitehall's crisis committee would be to send a Royal Navy captain as a special envoy to Tehran, to seek a deal.

Attempts have backfired in recent days to "shame" Mahmoud Ahmadinejad's regime into admitting it was in the wrong after the Ministry of Defence released co-ordinates of where the UK team were picked up. Neither the UN nor the EU would fully back tough statements from Britain.

Mr Ahmadinejad, the Iran presiddnt, said on Saturday that Britain had not reacted in a "logical or legal" way. "The British government, instead of apologising and expressing regret over the action taken, started to claim that we are in their debt," he said.,

The US president, George Bush, waded into the row, accusing Iran of "inexcusable behaviour", adding: "Iran must give back the hostages. They're innocent, they did nothing wrong and they were summarily plucked out of waters."

Sir Malcolm Rifkind, MP, the former foreign secretary, called for pressure on the Iranians, but said the threat of sanctions should have been put "privately" first, "because otherwise the Iranians are pushed into a humiliating climbdown".

Meanwhile, the MoD's claim the Britons had been in Iraqi waters when they were captured was challenged yesterday.

Craig Murray, a former British ambassador, accused Tony Blair of being too cavalier in his insistence that the British were in Iraqi territory at the time of their kidnap at gunpoint.

VIOLENT PROTESTERS DEMAND BRITISH EMBASSY BE CLOSED

HUNDREDS of students threw rocks and fireworks at the British Embassy in Tehran yesterday, calling for the expulsion of the ambassador amid the stand-off over Iran's detention of 15 British sailors and marines.

Several dozen policemen prevented the protesters from entering the compound, although a few briefly scaled a fence outside the embassy's walls before being pushed back.

The protesters chanted "death to Britain" and "death to America" as they hurled stones into the courtyard of the embassy. They also shouted "the British spies should be tried".

Inside the compound, one diplomat said the atmosphere was "fairly relaxed" and that no fire or petrol bombs had been hurled over the walls.

But outside, student groups demanded that Tehran expel Geoffrey Adams, the British ambassador, and close down the embassy, calling it a "den of spies". They also urged Tehran not to release Leading Seaman Faye Turney, the lone female captive, or show any flexibility until the British have apologised.

The student protesters at the embassy were dispersed by Iranian police after two hours. The demonstrators belong to the hardline Basij volunteer militia, which is under the control of the Revolutionary Guards holding the Britons captive.

One demonstrator warned that the British Embassy could face a similar fate to that of the US mission in Tehran - stormed with hostages taken in 1980 - if "Britain keeps on speaking nonsense".