Iran would easily be able to close the key oil shipping route of Strait of Hormuz if the country were attacked over its nuclear programme, the head of the Revolutionary Guards was quoted as saying yesterday.

Iran has ?the possibility of closing the Strait of Hormuz easily and on an unlimited basis,? state radio quoted Revolutionary Guards commander-in-chief Mohammad Ali Jafari as telling a news conference.

The United States and Israel, Iran?s arch foes, have not ruled out military action if the Islamic Republic continues work that they suspect is aimed at making nuclear weapons.

Iran rejects the charge and has repeatedly said it would retaliate if attacked. The United States has pledged to keep oil shipping routes open in case of conflict. ?In view of the proximity of the Strait of Hormuz ... to our shores, this distance is within the range of an assortment of weapons and its closure for us is very feasible and we face no limitations from the point of view of time,? Jafari said.

Oil movement through the Strait of Hormuz, the sea channel along Iran?s coastline at the entrance to the Gulf, is estimated to account for roughly 40 % of all seaborne oil traded, most of it going to Asia, the United States and westernEurope.

UPS AND DOWNS

Oil edges below $125 but tropical storm looms

Oil edged below $125 a barrel yesterday, pressured slightly by evidence of rising OPEC output, but supported by worries about supply disruption as a tropical storm threatened facilities in the US Gulf of Mexico.

Concerns about OPEC producer Iran?s nuclear programme also underpinned the market.

US light crude was trading 20 cents lower at $124.90 by 1112 GMT, while London Brent crude rose 14 cents to $124.32. Prices have recovered from a low hit last week of $120.42, the weakest since early May and far below the record of $147.27 struck on July 11.

They reached a session high of $126.35 early yesterday before easing slightly after a Reuters survey showed OPEC supply had risen for a third consecutive month in July mainly because of increased output from the world?s top exporter Saudi Arabia.

The modestly bearish impact was countered by Tropical Storm Edouard, which formed near a major oil and gas producing area of the northern Gulf of Mexico on Sunday, the US National Hurricane Center said.?The market still looks firm, although it is down from highs,? a broker said. ?Iran and Edouard are the main points to keep an eye on.?

The storm was expected to come ashore at close to hurricane strength in a few days on the Texas coast. Oil firms, including Royal Dutch Shell and ExxonMobil Corporation said on the day before production was  unaffected so far, but they werepreparing for possible evacuations of workers and temporary output shutdowns.

Traders were also nervous supplies could be disrupted as a result of tension between the West and the world?s fourth largest oil producer Iran.

Iran and the representative of six world powers talked by telephone yesterday about Tehran?s disputed nuclear programme, but the Islamic Republic said it would press ahead in spite of a demand to halt the work.Tehran failed to meet Saturday?s informal deadline to respond to a package of incentives offered by the six powers.

Oil supplies have already been disrupted from Nigeria, the world?s eighth largest oil exporter, as a result of militant attacks that have cut about a fifth of its production. Gunmen kidnapped two French expatriates near the country?s oil industry hub of Port Harcourt in the restive Niger delta, military and security sources said on the day before.