Iran Threatens To Squeeze Oil Flow

Iran's top leader, Ayatollah Ali Khamenei, warned on Sunday that energy shipments from the Gulf region would be disrupted should Iran come under attack from the U.S., insisting that Tehran will not give up its right to peacefully produce nuclear fuel.

"If you make any mistake [invade Iran], definitely shipment of energy from this region will be seriously jeopardized. You have to know this," Khamenei said in a speech broadcast live on state-run radio.

Khamenei also warned that, should a disruption occur, the U.S. and its allies would not be able to provide security to all the oil shipments that cross the strategic Strait of Hormuz - through which much of the world's oil supply must pass, within close range of Iran.

"You will never be able to protect energy supply in this region. You will not be able to do it," he said, addressing the West.

CBS News correspondent Mark Phillips reports that Iran has successfully carried out this kind of threat before. During the nineteen-eighties Iraq-Iran war it attacked shipping using heavy machine guns mounted on speedboats. It was a crude technique, but it worked, Phillips reports.

Khamenei, however, did not specify how oil supplies would be disrupted, and insisted Iran would not start any war. "We won't be the initiator of war," he said.

Iran is of the world's fourth largest oil exporter and second biggest power within the Organization of Petroleum Exporting Countries. Iranian officials have repeatedly ruled out using oil as weapon in the nuclear standoff with the West.

Secretary of State Condoleezza Rice didn't give the energy threats too much credence.

"I think that we shouldn't place too much emphasis on a threat of this kind," she said on Fox News Sunday. "After all Iran is also very dependent on oil revenue. I think something like 80 percent of Iran's budget comes from oil revenue."

But Rice did leave the door open for American military intervention in the crisis, should negotiations breakdown.

The president of the United States doesn't rule out any of his options," she said on CBS's Face the Nation. "But again, we believe that there is a lot of life left in the diplomacy here."

The supreme leader's harsh rhetoric came a day after Iranian President Mahmoud Ahmadinejad said a breakthrough in negotiations over Tehran's contentious nuclear program was possible and welcomed unconditional talks with all parties, including the United States.

Ahmadinejad said late Saturday that his government would not rush to judge an incentives package offered by Western countries to persuade Iran to cease enriching uranium.

Underlining his point, the president said "the Iranian nation won't give in to talks that contain threats or conditions that seek to deprive our definite right."

On CBS this Sunday, Rice said the Western powers were not trying to deprive Iran of a civil nuclear program.

"Iran keeps talking about its right to civil nuclear power, no one is questioning that it has a right to civil nuclear power," the Secretary of State said on Face the Nation. "But many countries have the right to that, that don't enrich and reprocess on their territory, and given Iran's history, it must not have the technologies that could lead to a nuclear weapon."

Six world powers agreed on Thursday to offer Iran a new package of incentives if it gives up uranium enrichment, or sanctions if it refuses. The plan could either defuse a global confrontation with the Islamic regime or hasten one.

The United States has warned Iran that it does not have much time to respond to the international package of rewards, suggesting that the window could close and be replaced by penalties if the Islamic republic doesn't react fast.

"We've said this can't be a matter of months, because the Iranians are continuing to move," Rice told Bob Schieffer. "One reason that it's important that they suspend is that the program can't just continue, even if you're in negotiations."

Khamenei said Iran was not a threat to any country and that Tehran was not seeking nuclear weapons. "We have not threatened any neighbor... accusation that we are seeking nuclear bomb is wrong, a sheer lie," he said.

"That a country has no right to achieve proficiency in nuclear technology means it has to beg a few Western and European countries for energy in the next 20 years," he said. "Which honest leader is ready to accept this?"

President Ahmadinejad has however repeatedly questioned Israel's right to exist and said the country should be wiped off the map.

"We have no target to use a nuclear bomb. It's against Islamic teachings," Khamenei insisted Sunday.