UAE cautions against escalating Iran tension

DUBAI (Reuters) - The United Arab Emirates cautioned against further escalation in tensions over Iran's nuclear activity and welcomed remarks by Iran's foreign minister, who on Thursday said regional "peace and tranquility" was in everyone's interest.

Confrontation is brewing between Iran and the United States over Tehran's nuclear work, which Washington and other powers say is aimed at developing atomic weapons but Iran says is peaceful.

Iran has threatened to close the Strait of Hormuz, which channels a third of the world's seaborne oil, if pending Western moves to ban Iranian crude exports cripple its lifeblood energy sector, fanning fears of a slide into wider Middle East war.

"It's important to get far away from any escalation and we stress the stability of the region. I welcome the comments of my colleague the Iranian foreign minister to create distance from any escalation," UAE foreign minister Sheikh Abdullah bin Zayed al-Nahayan was quoted as saying by state news agency WAM on Friday.

Iranian Foreign Minister Ali Akbar Salehi on Thursday said regional "peace and tranquility" was in the interest of all but warned neighboring states not to put themselves in a "dangerous position" by aligning themselves too closely with the United States.

Iran's Arab neighbors are close allies of Washington, which maintains a big naval force in the Gulf and says it will not tolerate any move to close the Hormuz waterway.

"What matters to us is that stability prevail in the region. We don't want anything to damage stability in the region and there is an effort from all to work towards stability," Sheikh Abdullah said.

European Union foreign ministers are expected at a meeting on Monday to agree an oil embargo against Iran and a freeze on the assets of its central bank, French Foreign Minister Alain Juppe said, confirming diplomatic leaks.

Saudi Arabia, the world's No. 1 oil exporter, has riled Iran by saying it could swiftly raise oil output for key customers if needed, a scenario that could transpire if Iranian exports were embargoed.

New U.S. sanctions signed into law by President Barack Obama on New Year's Eve would make it impossible for most countries to pay for Iranian oil, if fully implemented in coming months. Countries that already buy Iranian oil can receive waivers from Washington but are expected to reduce their imports over time.

Senior officials from big Asian oil-buying countries have visited the Gulf in recent weeks, apparently seeking alternative supplies from Arab states to replace Iranian oil.

(Writing by Isabel Coles; Editing by Peter Graff)