Iran should focus on oil products, not crude: Ahmadinejad

(Reuters) - Iran should stop exporting crude oil and instead try to sell refined oil products, President Mahmoud Ahmadinejad was quoted as saying on Tuesday, a day after the United States moved to tighten sanctions on its energy sector.

"We must stop the exports of crude oil," he was quoted as saying by the Islamic Republic News Agency (IRNA). "We must go in such a direction that we do not export crude oil, and this is doable through the development of refineries and distribution."

Iranian crude exports have fallen sharply because of U.S. and European Union sanctions aimed at starving Tehran of vital oil revenues for its disputed nuclear program by banning imports of both Iranian crude and refined products.

Washington has prohibited U.S. companies from trading in all Iranian oil products for years, while the EU banned its companies from importing crude and refined products from July 1.

Western government effort to pressure Iran's biggest customers in Asia not to buy from Tehran has focused on crude only because Iran struggles to meet its own needs for refined fuel.

Until 2007, Iran's inadequate refinery infrastructure and rising demand made it increasingly dependent on imported gasoline - a vulnerability Western powers have targeted by banning fuel sales to the country.

Ahmadinejad was speaking on Tuesday at a ceremony marking the opening of an oil refinery in the capital Tehran, IRNA said, which forms part of Tehran's response to its domestic gasoline supply problems.

Iran has succeed in reducing its gasoline import needs through a range of measures including fuel subsidy cuts, rationing and increased use of compressed natural gas.

Officials have Iran should focus on supplying itself with energy, including heavy investments in renewable technologies, and wean itself off heavy reliance on crude oil exports.

Iran oil exports fell further last month to between 1.2 million barrels per day (bpd) and 1.3 million bpd.

In his speech, Ahmadinejad complained that the price of oil was being kept artificially low by world powers. Saudi Arabia, a rival for Iran in the region and a U.S. ally, has boosted its oil production to counter the supply gap resulting from the sanctions against Iran.

"The price of oil is political and not based on economics, and if pricing were based on reality, the price of oil would be much greater than the prices in the markets now," Ahmadinejad was quoted as saying.