By Andrew Gray
WASHINGTON (Reuters) - An Iranian leader said on Wednesdayhe detected a better mood in talks over his country's nuclearprogram as the top U.S. military officer called for moredialogue to avoid a confrontation with Tehran.
Tensions have flared in recent days amid reports Israel isplanning for a possible strike against Iran's nuclearfacilities, sending crude oil prices near record highs.
But Iranian Foreign Minister Manouchehr Mottaki said he sawa "new sort of atmosphere" in nuclear talks with six big powersafter a recent approach to Tehran through the European Union.
President George W. Bush reiterated that diplomacy was thefirst option to address Iran's nuclear program, but he repeatedthat Washington had all options on the table.
At the Pentagon, Adm. Mike Mullen, chairman of the JointChiefs of Staff, said he believed Tehran was "still on a pathto get to nuclear weapons" but stressed he wanted to see thedispute with Iran resolved by peaceful means.
"I'm convinced that the solution still lies in using otherelements of national power to change Iranian behaviour,including diplomatic, financial and international pressure,"said Mullen, recently returned from a two-day trip to Israel.
"There is a need for better clarity, even dialogue at somelevel," he said.
U.S. military officials played down concerns that Tehranwould close the Strait of Hormuz, a key oil shipping route, inany military confrontation with Israel or the United States.
Speaking through an interpreter, Mottaki said "constructivestatements and approaches" and an earlier proposal by Iran had"paved the way for creating a new sort of atmosphere."
On behalf of the United States, Britain, France, Germany,Russia and China, EU foreign policy chief Javier Solana handedover an offer on June 14 of trade and other benefits designedto persuade Tehran to curb its nuclear work.
"Very soon I will respond to the letter given to me by thesix foreign ministers," Mottaki said at the United Nations.
U.S. MILITARY BACKS DIALOGUE
The United States and other major powers believe Tehranwants to build atomic bomb. Tehran insists its nuclear programis intended only to produce electricity.
Upbeat comments made by Mottaki on Tuesday were met withsome scepticism at the State Department.
"There needs to be some actual follow-through," StateDepartment spokesman Sean McCormack said. "Whether their publicstatements from the foreign minister are positive or not isreally not terribly important at this point."
"One hopes that it's a signal of something to come in termsof positive actions," he added. "I'm not going to dismiss them,but given the history of Iranian statements I'm also not goingto ... put more stock in them."
In Brussels, Solana said he would wait for Tehran's formalresponse to the incentives offer before commenting onstatements from Iranian officials.
Leaked reports of a major Israeli military exercise overthe Mediterranean on June 2 fed speculation that Israel mightbe preparing to strike Iranian nuclear facilities or press theUnited States to take military action.
Asked about the level of concern in the Pentagon thatIsrael could strike Iran by the end of the year, Mullen said:"This is a very unstable part of the world. And I don't need itto be more unstable."
He said a third conflict in the Middle East, on top of Iraqand Afghanistan, would be "extremely stressful" for the U.S.military.
One key concern for oil markets is that Iran, the world'sfourth-largest oil producer, could try to close the Strait ofHormuz in retaliation for any military strike. About 40 percentof seaborne oil trade passes through the strait, according tothe U.S. government.
The top U.S. naval commander in the Gulf played down thatconcern and said he would act if Iran made any such move.
"Iran will not attempt to close the Strait of Hormuz and wewill not allow them to close the Strait of Hormuz,"Vice-Admiral Kevin Cosgriff, the commander of the U.S. Navy'sFifth Fleet, told a conference in Abu Dhabi.
At the Pentagon, Mullen said Iran may might be able tocreate hazards in the strait but not maintain them.
There have been several incidents in the Gulf this year inwhich the U.S. ships have come close to skirmishing withapproaching boats in the busy waterway. U.S. officials haveblamed Iran, which has denied responsibility.
Oil rose above $142 a barrel Wednesday, below the record$143.67 hit Monday.
(Additional reporting by Patrick Worsnip and LouisCharbonneau at the United Nations, Jeremy Pelofsky and ArshadMohammed in Washington and Lin Noueihed in Abu Dhabi; Editingby David Storey)
