June 4, 2006

Rice says ‘wait and see’ on Iran oil threat hint

By Eric Walsh

WASHINGTON (Reuters) - U.S. Secretary of State Condoleezza
Rice took a wait-and-see approach toward Iran's next moves in a
dispute over its nuclear ambitions, after the country's top
religious leader suggested on Sunday it could disrupt oil
supplies if pushed.

"Well, 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 told Fox News Sunday.

Asked whether Iranian leaders had already rejected a
six-nation diplomatic initiative, by insisting there be no
preconditions for new talks on their nuclear program, 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," she told Fox News.

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

The timetable for a decision by Iran must not be endless,
Rice said on CNN's "Late Edition." But in the meantime, "We're
not going to react to every statement that comes out of Iran,"
she said.

She said Iran had a path to resolve the impasse but warned
"the international community is committed to a second path
should that first path not work."

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

Iranian officials have in the past ruled out using oil as a
weapon in the nuclear standoff.

His remarks, 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.

Washington accuses Tehran of seeking to develop atomic
weapons under cover of a civilian nuclear power program, a
charge Tehran denies. While calling for a diplomatic solution,
it has refused to rule out military action.

The incentives being offered in the new international
initiative have not been publicly announced, but diplomats are
considering an offer of nuclear reactors as well as security

International oil prices have stayed near record highs,
above $70 a barrel, partly because of fears Iranian exports
could be disrupted. Iran produces about 3.85 million barrels of
oil a day.