Iran has indicated it would be willing to supply natural gas to Europe amid concern that Russia could retaliate against EU sanctions by restricting its own supplies of the fuel.

The Islamic republic’s oil minister, Bijan Namdar Zanganeh, said at the weekend: “As a country capable of supplying gas in very big volumes, Iran is always willing to be present in Europe’s market, either through pipeline or in LNG [liquified natural gas] form.”

Energy supplies from Iran – holder of the world’s second-largest natural gas reserves – have been limited by sanctions aimed at curtailing its nuclear programme. However, a recent deal brokered by the US could see Tehran eventually re-emerge as a major global supplier at a time when markets are concerned about the reliability of Russia in the wake of the Ukraine crisis.

Stockpiles across Europe are thought to be high enough to absorb any short-term disruption to supplies from Moscow and offset the need to find new imports immediately.

Figures from the US Energy Information Administration show that Russia dominates Europe’s gas supply market, shipping 76pc of its exports of the heating fuel to the region last year.

European Union states have few options to diversify away from Russian gas amid more competition from fast growing economies in Asia and a reluctance to embrace fracking.

Russian President Vladimir Putin and German Chancellor Angela Merkel discussed the Ukraine crisis in a telephone call Sunday and the supply of gas and its transit, based on the results of a recent meeting in Warsaw. In Warsaw on Friday, Russia threatened to cut natural gas exports to Ukraine in June if it receives no prepayment in a row between Moscow, Ukraine and the EU over energy supplies.

"If we don't receive pre-payment for June by May 31, then it is possible Gazprom will reduce gas supplies to Ukraine or provide it with the capacity it has paid for by May 31," said Russia's Energy Minister Alexander Novak, according to a report by Reuters.

Iran is also keen to emphasize the potential role it can play ahead of a renewal of nuclear negotiations this summer. European oil companies such as Statoil had helped develop gas fields in the Persian Gulf before sanctions were imposed. Tehran is once again planning to reopen its oil and gas assets to foreign investment.

Tehran needs finance as it plans to invest $14bn (£8.3bn) to develop oil and gas fields that it shares with neighbours in the Persian Gulf. The South Pars fields, which combined with Qatar’s North Dome area, is estimated by the International Energy Agency (IEA) to hold 1,800 trillion cubic feet of natural gas and 51bn barrels of natural gas condensate – a high-value type of petroleum. The area has made Qatar the largest shipper of LNG in the world and a global energy superpower.

Discovered in 1990, the development of South Pars area has been plagued by technical problems, contractual disputes and the imposition of sanctions that forced international oil companies (IOCs) to step back.

Meanwhile, exports of crude oil from Iraq’s main export terminal in Basra have hit the highest levels since 2003, the government has said. Iraq is now producing almost 2.6m barrels per day of crude.