Iran warns on oil if US makes 'wrong move'

TEHRAN - Ayatollah Ali Khamenei, supreme leader of the world's fourth-largest oil exporter, said today that if the United States makes a "wrong move" toward Iran, energy flows in the region would be endangered.

Iranian officials have previously ruled out using oil as a weapon in their nation's nuclear standoff with the West, but Khamenei's comments suggested Iran could disrupt supplies if pushed.

His remarks, which are likely to upset wary oil markets, come days before EU foreign policy chief Javier Solana is to deliver a package of incentives developed by six world powers to persuade Iran to abandon plans to make nuclear fuel.

"If you (the United States) make a wrong move regarding Iran, definitely the energy flow in this region will be seriously endangered," Khamenei, who has the last word in all matters of state, said in a speech about the dispute.

US Secretary of State Condoleezza Rice reacted to his comments by counselling a wait-and-see approach.

"I think we shouldn't place too much emphasis on a move of this kind; after all Iran is very dependent on oil revenue," Rice said on Fox News Sunday. Washington accuses Tehran of seeking to develop atomic weapons under cover of a civilian nuclear power programme, a charge Tehran denies.

The United States says it wants a diplomatic solution but has refused to rule out military action.

Asked whether Iranian leaders had already rejected the six-nation initiative by insisting there be no preconditions for new talks on their nuclear programme, Rice said Iran had not yet received the proposal and would need time to assess it.

"It's sort of a major crossroads for Iran, and it's perhaps not surprising that they will need a little bit of time to look at it," the top US diplomat said on Fox.

President Mahmoud Ahmadinejad said on Saturday local time that Iran would consider the proposals from the United States, Russia, China, France, Germany and Britain but also insisted that the crux of the package was unacceptable.

The incentives being offered have not been publicly announced, but diplomats have been working on themes ranging from offering nuclear reactors to giving security guarantees.

A date for Solana's visit to Iran to deliver the package has yet to be announced. Iranian officials said the visit was expected in the next few days.

Washington has offered to join European countries in talks with Iran about the nuclear programme, but says Iran must first suspend uranium enrichment. Iran has so far rejected the demand, saying enrichment is a national right.

The timetable for an Iranian decision must not be endless, Rice said on CNN's "Late Edition." She said Iran had a way to resolve the impasse but warned "the international community is committed to a second path should that first path not work." Khamenei did not explicitly refer to enrichment in his speech that marked the anniversary of the death of Ayatollah Ruhollah Khomeini, the founder of the Islamic Republic.

But he said: "We are committed to our national interests and whoever threatens it will experience the sharpness of this nation's anger." Khamenei listed what he said were US failures in Iraq, Afghanistan, the Palestinian territories and elsewhere in the area. "You (the United States) are not capable of securing energy flows in this region," he said, addressing the crowd who were packed into Khomeini's mausoleum, south of Tehran.

International oil prices have stayed near record highs, above US$70 ($112) a barrel, partly because of fears Iranian exports could be disrupted if the nuclear dispute escalates. Iran produces about 3.85 million barrels of oil a day.

The Gulf Cooperation Council, a group of six Gulf Arab states including oil giant Saudi Arabia, said on Saturday they were "deeply worried about the developments in Iran's nuclear programme," after a meeting in Riyadh.

Two months ago, Iran staged naval war games in the Gulf, a shipping route that accounts for two-fifths of all globally traded oil. Analysts interpreted the manoeuvres as a message Iran could disrupt vital oil supply lines if it came under international pressure.

- REUTERS