(Edits)

BAGHDAD, July 11 (Reuters) - Iraq's Defence Ministry on Friday denied any Israeli air force drills had taken place in its airspace after a report that the Israelis were preparing there for a possible strike on Iran.

An Israeli military spokesman also described the report, carried on the website of the Jerusalem Post as "utterly baseless". In Washington, the Pentagon dismissed the report.

Major-General Mohammad al-Askari, spokesman for the Iraqi Defence Ministry, said: "As the Ministry of Defence, we haven't observed any IAF warplanes practising in Iraqi airspace."

Any reports which suggested Iraq had no knowledge of what was happening in its airspace were false, Iraq said.

The Jerusalem Post report, citing sources in the Iraqi Defence Ministry telling a local news network, said Israel Air Force (IAF) war planes were practising in Iraqi airspace and landing on U.S. airbases in the country as a preparation for a potential strike on Iran.

It said it could not confirm the veracity of the report.

Issuing an official denial, the Israeli military spokesman said: "Reports about putative Israeli air force (IAF) activities in Iraq are utterly baseless."

The Pentagon also dismissed the report.

"I find that report inconceivable, and clearly someone is either misinformed or intentionally trying to create mischief," Pentagon spokesman Bryan Whitman said.

Iran this week test-fired several missiles it said were capable of reaching Israel and U.S. bases in the Middle East. The United States has reminded Tehran it was ready to defend its allies.

The escalating tension helped to push oil prices to a new record high of near $147 a barrel on Friday. Iran is the world's fourth-largest oil exporter and there are fears of supply disruptions in the event of conflict.

The report referred to an airbase in western Anbar province near the town of Haditha. The airbase is controlled by the U.S. military.

Security for Anbar is still formally in the hands of the U.S. military, although control is expected to be transferred to Iraqi security forces soon. Iraq has security control over nine of its 18 provinces.

While Iraq has a large army and police force, its airforce is still very small. (Reporting by Khalid al-Ansary and Dean Yates in Baghad, Alastair MacDonald in Jerusalem and David Morgan in Washington; editing by Alison Williams)

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