June 06, 2006	Tuesday	Jumadi-ul-Awwal 9, 1427

WASHINGTON, June 5: World oil prices surged above $73 a barrel on Monday despite US assurances that Iran could not carry out its threat to disrupt oil movements in the Persian Gulf.

On Sunday, Iran’s supreme leader Ayatollah Ali Khamenei indicated that Iran might use oil as a weapon in its nuclear dispute with the US.

Asked to comment on his speech, US Secretary of State Condoleezza Rice told reporters she believed it would be difficult for Iran to carry out this threat.

“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,” she said.

But her assurance failed to convince oil traders. US crude was trading $1.15 higher at $73.48 a barrel on Monday — the highest level in three weeks. Brent crude, meanwhile, was up $1.30 to $72.33 in London.

Iran is the world’s fourth largest producer of oil and its strategic location allows it to disrupt oil supplies through the Gulf. About 20 per cent of the world’s daily oil needs –- 17 million barrels a day — passes through the Gulf region.

Since early this year, even the slightest sign of deterioration in the Iran-US dispute has adversely affected the oil market by causing a price hike.

The European Union’s Javier Solana is expected to deliver an incentive package to Iranian officials in Tehran on Tuesday.