Iran’s fresh threats to shut the strategic Hormuz Strait through which over a fifth of the world’s oil exports pass are meant to keep crude prices high and render Western sanctions ineffective, a senior Saudi banker has said.

In case Iran carries out its threat and block the vital waterway, oil prices could rocket above $150 a barrel due to fears of crude export disruption, Said Al-Shaikh, Senior Vice President and Group Chief Economist of the National Commercial Bank (NCB) said in press comments on Wednesday.

Quoted by Saudi newspapers, Al Shaikh said he expected oil prices to average around $115 a barrel in the first quarter of 2012, but added price forecasts remain difficult in the present economic and political conditions.

“In case conditions deteriorate, leading to a military confrontation in the region, or Iran carries out its threat to close Hormuz Strait-- albeit partial closure-- then oil prices could shoot above $150 a barrel due to fears of export disruptions or fall in crude production worldwide,” he said.

“There is another scenario which is that Iran is making such threats to keep oil prices high and push up insurance premium on ships entering the Gulf in order to make the West’s ban on Iranian oil ineffective.”

Al Shaikh said any surge in insurance premium on shipping crossing Hormuz into the Gulf could negatively affect Western sanctions on Iran on the grounds the ban will become costly for the countries which implement those sanctions. “I believe that is what is going on in the minds of the Iranians…this scenario means that Iran is not heading for war but will keep the heat in its statements to ensure prices remain high.”