By Dan Williams

JERUSALEM, June 8 (Reuters) - Israeli defence officials and political pundits rounded on Deputy Prime Minister Shaul Mofaz on Sunday after he threatened an attack on Iran, accusing him of exploiting regional war jitters to advance personal ambitions.

Mofaz, a former military chief who is now a top challenger to the embattled Prime Minister Ehud Olmert in their Kadima party, said in a newspaper interview last week that Israeli strikes on Iran looked "unavoidable" given progress in its nuclear plans.

The remarks helped drive up oil prices by nearly 9 percent to a record $139 a barrel on Friday and drew a circumspect response from Washington, which has championed U.N. sanctions against Iran while hinting that force could be a last resort.

While the White House suggested Mofaz was giving voice to the Jewish state's fear of the Islamic republic, officials in Israel's Defence Ministry pointed to a power-struggle roiling centrist Kadima as Olmert tries to beat off a bribery scandal.

"Turning one of the most strategic security issues into a political game, using it for the internal purposes of a would-be campaign in Kadima, is something that must not be done," Deputy Defence Minister Matan Vilnai told Israel Radio.

The state-owned broadcaster quoted another senior defence official as saying Mofaz's interview "did not reflect policy" and "risked making it even harder for Israel to persuade more countries to step up their sanctions against Iran".

Spokesmen for Mofaz, an Iranian-born, ex-defence minister whom Olmert shunted to the transport portfolio in a 2006 cabinet reshuffle, could not be reached for comment.

CHALLENGE

Though Iran denies seeking nuclear weapons, the virulently anti-Israel statements of its government pose a challenge for Israeli leaders, who must at once reassure their public while trying to keep in sync with U.S. interests in the Middle East.

Israel, which is assumed to have the region's only atomic arsenal, bombed an Iraqi reactor in 1981 and, last September, a Syrian target which the Bush administration -- drawing denials from Damascus -- described as a secret nuclear facility.

But many independent analysts say Iran's nuclear sites are too numerous, distant and fortified for Israel to take on alone. Iran, for its part, has threatened to retaliate for any attack with missile salvoes against Israel and U.S. assets in the Gulf.

The mass-circulation Israeli daily Maariv devoted a full spread to the fallout from Mofaz's interview with the rival Yedioth Ahronoth. Maariv's headlines, "Big Mouth", "Demonstrable Damage" and "Boomerang", left little doubt as to its views.

"Were Mofaz defence minister today, he would demand that the transport minister be fired forthwith," wrote Maariv's Ben Caspit. "Suddenly, (Iranian President Mahmoud) Ahmadinejad is the underdog. Iran is on the defensive from crazed Jews."

There was agreement from Yedioth's economic analyst, Sever Plotzker, who suggested that Mofaz was, paradoxically, giving a back-end boost to Iran -- the world fourth-biggest oil producer:

"Blathering away about how 'we'll attack and destroy you' does not deter the decision-makers in Tehran, but it does drive the oil markets crazy ... And who profits from that? Tehran." (Editing by Matthew Jones)

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