Iranian President Mahmoud Ahmadinejad has threatened to hold back oil sales if the country is referred to the United Nations Security Council for possible sanctions over its nuclear programme.

"If Iran's case is sent to the Security Council, we will respond by many ways, for example by holding back on oil sales," he told the Gulf daily Khaleej Times.

Iran is the second largest oil producing country in the Organisation of Petroleum Exporting Countries.

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Ahmadinejad also said there was no question of Iran using nuclear energy for making weapons as the country was governed by Islamic principles, which prohibited production or use of nuclear weapons.

"Our religion prohibits us from having nuclear arms and our religious leader has prohibited it from the point of view of religious law.

"I insist we don't need nuclear arms and our laws don't allow us to produce them. We are always acting in accordance with international law," he said

He dismissed accusations that Iran was sheltering al Qaeda and said, "Al Qaeda [Images] is sure the enemy of Iran, they have killed 11 Iranian diplomats."

Asked about reported threats by some Iranian officials to trigger a rise in oil prices and pull out of the Nuclear Non-Proliferation Treaty, he said, "Any smart human being should use every resource in order to achieve his independence I doubt that the leaders of US and Europe are that far removed from reality."