Venezuelan President Hugo Chavez sealed an agreement to export 20,000 barrels per day of gasoline to Iran, state TV reported Monday. The deal would give Tehran a cushion if the West carries out threats of fuel sanctions over Iran's nuclear program.

The two countries signed the agreement late Sunday during a visit by Chavez, who pledged to deepen ties with Iran and stand together against what he called the imperialist powers of the world.

Western leaders have threatened to impose further sanctions against it should Iran refuse to bend to deadlines for talks aimed at curbing Tehran's nuclear activities. One idea that has been touted, though not yet formally proposed, is to cut off exports of gas station-ready fuel to Iran.

One of Iran's weakest points is its dependence on fuel imports. Despite its vast oil resources, it lacks the refinery capacity to meet its own demand and must buy vast quantities of commercial-ready fuel on the open market.

The Venezuelan fuel could help Iran if such sanctions are imposed.

"On the basis of a strategic decision, it was agreed to export 20,000 barrels a day of gasoline from Venezuela to Iran," state TV quoted Chavez as saying at the end of his visit. The fuel shipments will begin in October.

Iran has managed to ride out the limited sanctions so far without serious hardships, although lack of significant foreign investment has left the economy stuck in low gear for years.

The U.S. and some of its allies accuse Iran of using its civilian nuclear program as a cover to develop nuclear weapons. Iran has denied the charges, saying its nuclear program is aimed at only at generating electricity.

Iranian leaders - particularly President Mahmoud Ahmadinejad - have repeatedly insisted that Iran would never uranium enrichment, which the U.N. has demanded it halt. The process can produce fuel for a reactor or a warhead.

President Barack Obama and European allies have given Iran until the end of September to agree to talks on its nuclear program. Iran has rejected any deadlines but its top nuclear negotiator Saeed Jalili said last week that Tehran has prepared to present a package of new proposals and would be ready to open talks "in order to ease common concerns in the international arena."

Chavez said Venezuela will import machinery and technology from Iran in return for its gasoline exports, the TV report said.

The broadcast also quoted Ahmadinejad as saying that the two countries agreed to set up a bank together to help finance joint projects.

Source: GoogleNews