LONDON - WORLD oil prices have so far not been pushed up much by post-election violence in key crude producer Iran - but they could spike higher if the situation deteriorates, analysts warn.

Iran has ruled out cancelling the disputed presidential June 12 vote as the international community voices increasing alarm at a violent crackdown on opposition demonstrators.

The Islamic republic produces about 3.8 million barrels of crude oil per day and is the third biggest global oil exporter after Russia and Saudi Arabia.

Analysts fear the biggest crisis since the 1979 revolution could force the Iranian government to cut off oil supplies or block the Strait of Hormuz - a crucial passageway for oil tankers. The opposition has been staging almost daily rallies to protest at alleged fraud and widespread irregularities in Iran's election which returned hardline President Mahmoud Ahmadinejad to power for another four years.

But oil prices have fallen heavily since the election, dampened by the dire global economic outlook and a stronger dollar.

New York's main futures contract, light sweet crude for delivery in August, traded at about US$67 (S$97) per barrel on Tuesday. That compared with more than US$72 one week earlier.

After Saudi Arabia, Iran is the second largest member of the 12-nation Organization of Petroleum Exporting Countries (OPEC), which accounts for 40 per cent of all world crude supplies.

'There is no indication that (Iranian) oil production will be affected,' said Francis Perrin, director of the journal Arab Oil and Gas. He added that traders expected other OPEC member nations would compensate for any potential loss in Iranian oil output.

Analyst Nimit Khamar, at Sucden Financial Research, noted that there had not yet been any disruption. 'However, there is market talk that Iranians are trying to organise a national strike including the oil industry in reaction to the reappointment of Ahmadinejad.'

Hanson Westhouse analyst David Hart told AFP that the oil market would benefit from high stockpile levels as well. -- AFP