Iran hints it may use oil weapon in nuclear row

TEHRAN, June 4 (Reuters) Ayatollah Ali Khamenei, supreme leader of the world's fourth largest oil exporter, today said that if the United States makes a ''wrong move'' towards Iran, energy flows in the region would be endangered.

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

His remarks, which are likely to unsettle wary oil markets, come days before EU foreign policy chief Javier Solana is due to deliver a package of incentives agreed by six world powers and designed 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 which discussed the dispute.

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.

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.

President Mahmoud Ahmadinejad yesterday said 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.

REUTERS SK BD1542