CNN - 5/6/2006
Oil prices have surged above $73 a barrel after Iran warned the U.S. that any "misbehavior" could endanger oil movements in the Persian Gulf.
U.S. light crude for July delivery is up 82 cents or 1.1 percent at $73.15 a barrel in electronic trade on Monday, after reaching a high of $73.55 earlier.
The figure is oil's highest price in three weeks. Oil futures reached $75.35 on April 21 and 24, the highest since trading began in 1983.
London Brent crude rose 92 cents to $71.95 a barrel in Monday trade.
Iran's supreme leader, Ayatollah Ali Khamenei, said Sunday that any "misbehavior" directed at Iran would serve to disrupt Persian Gulf shipments.
"In order to threaten Iran, you say that you can guarantee movements of oil through this region," he said, referring to shipments that pass through the strategic Strait of Hormuz near Iran and other countries.
About 17 million barrels a day -- 20 percent of the world's daily needs -- leave the Gulf region via oil tankers using the narrow passageway.
The United States "should know that the slightest misbehavior on your part would endanger the region's energy security," he said. "You are not capable of guaranteeing energy security in this region."
Khamenei did not specify what he meant by disruption or misbehavior.
"If you, the United States, make a wrong move regarding Iran, definitely the energy flow in this region will be seriously endangered. We are committed to our national interests, and whoever threatens it will experience the sharpness of this nation's anger," he said.
U.S. Secretary of State Condoleezza Rice deflected concerns about the remarks. "We're not going to react to every statement that comes out of Iran," she told CNN's "Late Edition."
"The oil card -- well, let's just remember that Iran is some 80 percent dependent on oil in its budget" and would be unable to handle a disruption, she said.
Oil prices have also been boosted by production problems at U.S. refineries at the start of the peak northern summer driving season.
Iran is embroiled in a standoff with the West over its nuclear ambitions.
Although Washington has no diplomatic relations with Iran -- which President Bush branded part of an "axis of evil" -- the United States last week agreed to join European allies in negotiations with Tehran if Iran suspends its uranium enrichment program and resumes full cooperation with the International Atomic Energy Agency.
The Islamic republic says it wants to pursue nuclear power for peaceful purposes, but the United States and the European Union believe it harbors aspirations to be armed with nuclear weapons.
Six world powers -- Germany and the five veto-wielding members of the U.N. Security Council -- last week agreed on a package of incentives if Iran stops uranium enrichment, or penalties if it refuses.
"That diplomatic process needs to work now with Iran being given the proposal that the six parties put together in Vienna, with Iran recognizing that it now has a path ahead that would allow an end to this impasse," Rice said. "But also that the international community is committed to a second path should that first path not work."
The EU's Javier Solana is expected to leave Brussels on Sunday for a Middle East tour that could accommodate a detour to the Iranian capital. (Full story)
Rice refused to lay out a timetable for Iran to respond to the latest overture, saying, "I don't believe in setting timelines and deadlines. The only point here is that this can't be endless. The Iranian program is progressing, and the international community needs to know if there is a negotiating option that really has life in it."
Rice also rejected assertions by Iranian leaders that the West is trying to prevent Iran from having nuclear energy.
"If what Iran is looking for is civil nuclear technology, a peaceful program with civil nuclear technology, no one is trying to deny them that," she said.
"They've said from time to time that they have a right to civil nuclear, to a civil nuclear program. We accept that."
"The question is, can they have a civil nuclear program that does not have the proliferation risk associated with having ... certain fuel-cycle technologies on Iranian territory?"