"If they impose sanctions on Iran's oil exports, then even one drop of oil cannot flow from the Strait of Hormuz," Iranian First Vice President Mohamed Reza Rahimi said.
The narrow strait, which includes Iranian territorial waters, is a vital artery for transporting about a third of the world's tanker-borne oil and about 17 percent of all world oil shipments.
About 13 tankers carrying 15.5 million barrels of crude oil pass through the strait on an average day, including crude from Iran, Iraq, Kuwait, Saudi Arabia and the United Arab Emirates.
Iran has "no desire" for hostilities, Rahimi was quoted by Iran's official Islamic Republic News Agency as saying. But "our enemies will give up on their plots against Iran only if we give them a firm and strong lesson."
Iran began a 10-day naval exercise in the strait area five days ago, with Iranian ships and aircraft dropping mines into the sea Tuesday, an Iranian navy spokesman said.
Rahimi's threat came as President Barack Obama prepared to sign legislation that, if fully implemented, could substantially reduce Iran's oil revenue in a bid to deter it from pursuing a nuclear weapons program.
In Hawaii, where Obama is vacationing, a spokesman said the White House would have no comment on the threat.
In Washington, State Department spokesman Mark Toner called the threat "bluster" intended to "distract attention from the real issue, which is their continued non-compliance with international nuclear obligations."
The threat came a month and a half after the International Atomic Energy Agency, which seeks to promote nuclear energy's peaceful use, published a report that for the first time laid out evidence Iran may be secretly working to design a nuclear warhead, despite the country's repeated denials.
Iran insists its program is for peaceful purposes.
In light of the agency report and a November attack on the British Embassy in Tehran, the European Union is considering strict new sanctions, including an embargo on Iranian oil.
EU ministers said Dec. 1 they would decide on those new sanctions no later than next month.
EU countries receive 450,000 barrels a day of Iranian oil.
Iran is the world's third-largest energy exporter, with oil exports financing as much as half its national budget.
Oil prices rose above $101 a barrel in electronic trading on the New York Mercantile Exchange early Wednesday. In London, Brent crude from the North Sea topped $109 a barrel on the ICE Futures Europe exchange.