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Saudi Arabia says Iran boycott reports baseless

DUBAI, Jan 4 (Reuters) - Saudi Arabia has dismissed newspaper reports quoting an unnamed Saudi official as saying Gulf Arab states might boycott Iran over its territorial dispute with the United Arab Emirates.

A Saudi Foreign Ministry statement carried by the official Saudi Press Agency late on Wednesday said the reports carried by the UAE's Gulf News and al-Ittihad dailies on Tuesday were "baseless and categorically untrue."

The papers said the official did not rule out a Gulf Arab economic and diplomatic boycott of Iran in the dispute over the three Gulf islands, but said Saudi Arabia hoped it would not come to that.

The reported comments appeared unusual for an official from Saudi Arabia, which has moved faster than most other Gulf Arab states to improve relations with non-Arab Iran since moderate Iranian President Mohammad Khatami was elected in 1997.

A Gulf Cooperation Council summit in Bahrain released a statement on Sunday that backed the UAE's rights to the three islands and urged Tehran to agree to refer the dispute to the International Court of Justice.

The three small but strategic islands of Abu Musa and the Greater and Lesser Tunbs are located near key oil shipping lanes at the mouth of the Gulf. They are held by Iran but also claimed by the UAE.

The GCC alliance groups Saudi Arabia, Kuwait, the UAE, Oman, Bahrain and Kuwait.

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