Early this month, Israeli Prime Minister Ehud Olmert said Tehran must also be made to see it will suffer "devastating repercussions” if it pursues atomic weapons.

In response, Iran has warned Israel it will react "most severely” if Israel uses force to try to destroy its nuclear facilities.

The Israeli prime minister insists the Iranian threat must be stopped by all possible means before it is too late. The US and others have accused Iran of building a nuclear arm capability but Tehran says its programme is peaceful.

Iran’s supreme leader, Ayatollah Ali Khamenei, insists his country would not make nuclear weapons but would continue its civilian nuclear programme.

Recently, the UN’s nuclear watchdog said Iran’s alleged research into warheads was of "serious concern”, urging the country to give "full disclosure” on its atomic work.

The latest report from the International Atomic Energy Agency (IAEA) that Iran is not cooperating fully in the investigation of its nuclear activities leaves this potentially serious crisis open.

In particular, the IAEA is concerned about Iran’s acquisition, probably from the Pakistani nuclear scientist AQ Khan, of a 15-page document describing, as the IAEA puts it, "the procedures for the reduction of UF6 (uranium hexafluoride) to uranium metal and the machining of enriched uranium metal into hemispheres, which are components of nuclear weapons”.

Iran has told the IAEA that this design document was received along with the P-1 centrifuge (machines that enrich uranium) documentation in 1987 and that it had not been requested by Iran.

The obvious immediate concern about the growing crisis is that once another war in Middle East erupts, the cost of oil world wide will surely climb up. And each time countries in the Middle East are at war, developing countries feel it more than anybody else.

The American-led invasion of Iraq led to the loss of oil production in the Gulf state, something that has negatively impacted on other countries. In mid- 2002, there were over six million barrels per day of excess production capacity and by mid 2003, this had dropped to below two million.

It dropped still further in 2004/5. A million barrels per day is not enough reserve capacity to handle any sudden drop in production.

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