Brent crude, too, was up 55 cents at $124.17 per barrel in London.

And this was despite the Energy Information Administration (EIA) saying Thursday that crude inventories in the US rose 1.6 million barrels last week and that oil demand has dropped 6.7 percent from a year ago. Traders apparently brushed off this evidence of the weakness in US crude demand. “The ability of crude to post new highs in the face of what appeared to be a bearish EIA report attests to the underlying strength of this price advance,” energy trader and consultant Ritterbusch and Associates said in a report. “The oil market has evolved into somewhat of a self perpetuating cycle in which new highs beget new buying, that forces new highs.”

And interestingly, despite the tightening sanctions, and reports that traditional Iranian customers are beginning to look around, Tehran is continuing to underline. Its crude oil output is expected to remain steady at around 3.5 million barrels per day (bpd) in February, showing no sign of a slowdown despite the sanctions.

“The production for this month will be the same as the previous, around 3.5 (million bpd),” Mohammad Ali Khatibi, its OPEC governor told Reuters on Thursday. “There will be no change, things are going as normal here.” Khatibi insisted there was no need so far to reduce Iran’s output. “We still have customers, everything is normal.” And Iran’s deputy oil minister is also holding the same line: Iran would lower its oil exports if it sees the demand for its crude dropping. Tehran is insisting it has not registered a drop in demand and sales.

The psychological war thus continues. And in the meantime, conflicting reports are adding to the confusion, if pre-empting the EU embargo decision in a bigger manner, Iran has halted oil exports to several other EU-member countries too. Earlier the month, Iran’s government-backed Press TV carried a report that the country had halted crude oil exports to six European countries with immediate effect. The countries subject to the embargo were subsequently identified as France, Greece, Italy, the Netherlands, Portugal and Spain.

Iran’s biggest European customers are Italy, which took around 200,000 bpd of Iranian crude oil in 2010 (the most recent year for which full annual figures have been published), followed by Spain, which imported around 150, 000 bpd.

The announcement of Iran’s own embargo on oil sales to a number of European countries was subsequently contradicted by the country’s oil ministry, insisting instead it has halted exports to French and British companies. Yet the news was picked up and widely reported by international news agencies, sparking a jump in crude oil prices.

Analysts however, do not believe that Iran has actually halted crude oil deliveries to all these European countries. Julian Lee of the London based Centre for Global Energy Studies (CGES) believed that for the time being, the country is quite content to sow the seeds of uncertainty and play on the oil market’s fears of a supply shortage, enjoying the benefits of higher oil prices, while continuing to export as much oil as possible.

So far this year, the price of the OPEC Basket of crudes has averaged at least $5/bbl more than it did during December 2011, due in large part to the threat of a disruption to Iran’s oil exports, Julian insists.

CGES hence projects that based on exports of around 2 million bpd, higher prices have so far netted Iran at least an additional $460 million in oil export revenues this year. Little wonder that the government is quite happy to allow stories to be broadcast that cast doubt on its actions and stoke oil market uncertainty.

Indeed everything is possible is love and war!

And this leads us to another interesting debate — the impact of the proposed crude oil export embargo on Iran — the country largely dependent on revenues from crude exports. Indeed Iranian regular and traditional customers are under pressure to reduce imports from Tehran too. They are indeed striving — to varying extent.

China is indeed the largest buyer of Iranian crude. Now Beijing, under extreme US pressure is looking around, trying to secure its needs from Saudi Arabia and other suppliers too. But at the same time, reports indicate that Beijing is attempting a hard bargain with Tehran too on the issue. A smart move indeed on part of Beijing! While Tehran needs to secure its customer base as much as possible, it would be difficult for the Iranian oil strategist to stand by a very a firm line on prices. It may ultimately have to give in — at least to some extent. And that would be the real topping on the cake — as far as Beijing is concerned.

Japan and South Korea are also trying to diversify their sources — yet the fact remains — there are limits to it. A considerable portion of their energy needs would have to be met from Tehran for more than one reason — from technical to commercial.

Conflicting signals are emanating from New Delhi too. While it would not want to appear giving in completely to the US demands, it knows it has its limits too. Hence it is endeavoring to be at a mid-point, diversifying away wherever possible, yet keeping contacts intact with Iran too. And hence despite all the pressure, it is constrained to continue buying from Iran too.

Turkey has already indicated it cannot give in completely to the whims of Washington and Brussels. Its interest commands it to continue buying from Iran too. Pakistan, the next door Iranian neighbor is believed to be discussing a barter agreement with Iran — against wheat.

So all said and done, Iran would continue to sell some of its crude. Buyers would still be there — despite all the pressures. And the creeping prices have already helped Iran swell its kitty.

One thing is thus becoming apparent — despite the embargo — the Iranian regime may still survive. The additional inflow of petro dollars at this moment, and the continued sales — even if at a lower rate — would help Iran gain time and survive this phase too. And the current Iranian belligerence and intransigence — while the IAEA team was there in Tehran last week- had a basis. Some cold calculations were definitely behind it!