by Sammy Ketz
NAJAF, Iraq, Aug 9 (AFP) - Shiite Muslim radical leader Moqtada Sadr vowed to fight to his "last drop of blood" Monday as intense clashes engulfed Najaf for a fifth straight day and the threat of attack halted output from Iraq's southern oilfields, sending world prices to record highs.
"I will defend Najaf until my last drop of blood," Sadr vowed from the Imam Ali shrine, as mortar and machine-gun fire rocked the central holy city.
"I am an enemy of America and America is my enemy until the day of the last judgement," he said, rejecting calls by interim Prime Minister Iyad Allawi for his men to lay down their arms and leave the city.
Artillery and tank fire, backed by air power, battered Najaf where Sadr's Mehdi Army were hunkered down in the vast cemetery and around the city-centre shrine, a militia stronghold since his spring uprising against foreign troops.
Defence Minister Hazem Shaalan warned that the Iraqi army could join the offensive to "crush" the militia and a senior US official said the marines had been given permission to enter the shrine to conduct their operation.
"But we have not done it as of now," the spokesman said.
"We respect the shrine and any action taken will be on the order and direction of the governor," he added.
In the main southern city of Basra, a British spokesman said two vehicles were damaged in an apparent Mehdi Army attack, but said all personnel were accounted for.
Salam al-Maliky, a Sadr supporter on the provincial council, threatened to fight for the secession of the three southern provinces of Basra, Dhiqar and Maysan if US troops did not withdraw from Najaf.
Another Sadr aide, Asaad al-Basri, threatened attacks against key oil infrastructure, prompting the state-owned Southern Oil Company to announce it had stopped pumping crude.
"We have stopped pumping oil for security reasons," said company official Hasaneen Mohammed al-Mohammedi without elaborating.
Security was stepped up across Iraq's southern oilfields, the only source of exports since an attack on a key pipeline artery to Turkey halted limited deliveries from the main northern oilfields last week.
The halt sent New York crude to an all-time high, flirting with 45 dollars a barrel.
Light sweet crude for delivery in September surged 1.02 dollars to 44.97 dollars a barrel early afternoon, thundering past the previous record, set Friday, of 44.77 dollars.
In Sadr's Baghdad stronghold, the government imposed a curfew from 4:00 pm (1200 GMT) to 8:00 am in an effort to clamp down on escalating insecurity.
Mortar bombs rained down around the district council hall in the sprawling Shiite neighbourhood of Sadr City from around 8:00 am, missed their target and slammed into adjacent houses, but there were no reports of casualties.
A video purporting to show a police general kidnapped by Sadr's militia in a bid to force the release of captured fighters was shown on Arab television, which the Iraqi government has banned for a month for inciting violence.
The interior ministry admitted that a policeman had been abducted from a police station in Sadr City, but insisted he was not a high ranking officer.
A Sadr spokesman said he was unaware of the kidnapping.
Elsewhere, a suicide bomber blew up a car in Baladruz, near the restive city of Baquba, northeast of Baghdad, killing six Iraqis and wounding 16, including an official in the local provincial government, police said.
An Islamist website said militants loyal to Al-Qaeda's alleged chief in Iraq, Abu Mussab al-Zarqawi had claimed the bombing.
In western Iraq, the military reported that a US marine was killed in the volatile province of Al-Anbar while conducting what the military described as "security and stability operations".
Against the backdrop of continued violence, Ahmed Chalabi, prominent politician and disgraced Pentagon darling, said he would return to Baghdad from Tehran "in a few days" to challenge an arrest warrant.
Speaking to AFP, he dismissed the fraud allegations against him as "outrageous, ridiculous and politically motivated lies".
His nephew, Salem Chalabi, head of the special tribunal that is trying ousted president Saddam Hussein, also told the BBC that he would return to Iraq to defend himself against a murder charge which he said was a deliberate ploy to discredit the court.
Both will be arrested the moment they set foot in Iraq, Zuhair al-Maliky, the judge who issued warrants against them, said.
Meanwhile, Iran said it was working frantically to secure the release of one of its diplomats "detained" by an Islamist group in Iraq for allegedly stirring sectarian strife and for activities outside his diplomatic duties.
Al-Arabiya showed pictures of Fereydun Jahani's passport, identity and business cards, including one from the Iranian Revolutionary Guards, casting doubt on claims that Jahani was only a diplomat.
He disappeared on Wednesday en route to central holy city of Karbala to open an Iranian consulate, the embassy said.
"What we do know is that he is alive and well," Foreign Minister Kamal Kharazi said, adding: "We are working on this matter hour by hour."