Fear of an escalation in the standoff between the West and Iran, the world’s fourth largest oil producer, have been one factor propping up sky-high oil prices. Crude hit a record level on international markets near US$143 a barrel on Friday.

Speculation about a possible attack on Iran because of its disputed nuclear ambitions has risen since a report this month said Israel had practiced such a strike, prompting increasingly tough talk of retaliation, if pushed, from Tehran.

“Naturally every country under attack by an enemy uses all its capacity and opportunities to confront the enemy,” Guards commander-in-chief Mohammad Ali Jafari told Jam-e Jam newspaper in some of the toughest language Iran has used so far.

Analysts say Iran may not match the firepower of U.S. forces but could still cause havoc in the region using unconventional tactics, such as deploying small craft to attack ships, or using allies in the area to strike at U.S. or Israeli interests.

“Regarding the main route for exiting energy, Iran will definitely act to impose control on the Persian Gulf and Strait of Hormuz,” Jafari said of the Gulf waterway through which about two-fifths of all globally traded oil passes.

Iranian officials have in the past sent mixed signals about whether Iran would use oil as a weapon. But such threats, when made, have sent jitters through the crude market for fear of disrupting supplies from big OPEC producers in the Gulf.

The Islamic Republic insists its nuclear program is peaceful and aimed at generating electricity. But the West and Israel fear Iran is seeking to build atomic bombs. Israel is believed to be the only Middle East state with nuclear arms.

Washington has said it wants diplomacy to end the nuclear row but has not ruled out military action should that fail.

“If there is a confrontation between us and the enemy from outside the region, definitely the scope (of the confrontation) will reach the oil issue,” Jafari said.

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