Tehran on Monday gave the strongest indication yet that it would reject international calls to scale back its nuclear programme, intensifying the long-running controversy over its ambitions and nudging world oil prices higher.

Comments by Ayatollah Ali Khamenei, Iran’s supreme leader, which suggested such a rejection prompted President George W. Bush to call for a firm response by the United Nations in the wake of any Iranian refusal.

Iran has said it will respond by Tuesday to an incentive package to curb its nuclear activities, while the UN Security Council has set Tehran a deadline of August 31 for suspending uranium enrichment – a process that can produce both nuclear fuel and weapons grade material.

Iranian state television on Monday reported Ayatollah Khamenei as saying that Iran had “made its own decision” and “God willing, with patience and power, will continue its path”.

Mohammad Saeedi, the deputy head of Tehran’s Atomic Energy Organisation, told Iran’s Fars news agency that suspending uranium enrichment was “not possible any more”.

Iran’s defiant tone, and the potential threat of sanctions against Tehran, helped push oil futures higher, with Nymex crude rising 61c at $71.75 a barrel in midday New York trading. Brent rose 75 cents to $73.05.

Speaking at a press conference in Washington, Mr Bush said the US would await a formal response from Iran. ”I certainly want to solve this problem diplomatically and I believe the best chance to do so is for there to be more than one voice speaking clearly to the Iranians.”

But he added: “In order for the UN to be effective, there must be consequences if people thumb their nose at the UN Security Council.”

The US government has made clear it will argue for sanctions against Iran if it fails to comply, although Russia and China have argued against the early use of punitive measures.

On Monday the Associated Press also reported that Iran had restricted UN inspectors’ access to the country’s nuclear site of Natanz. But it was unclear whether the reduced access amounted to a violation of Tehran’s international obligations.

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