The US says it has blocked a pipeline used to pump Iraqi oil to Syria, in volume that allegedly violated UN sanctions.
Ties between the US and Syria have long been strained
There were fresh rumours last week that Syria had been importing large amounts of Iraqi oil in contravention of sanctions on Iraq, when Syrian crude oil deliveries fell sharply after a pipeline was thought to have been bombed.
The disclosure can only add to increasingly strained relations between the US and Syria, which on Tuesday rebuffed recent US allegations that it is developing chemical weapons.
Syria said such claims were designed to further the interests of Israel.
Arab countries, Russia and the European Union have also condemned the US for making threats against Syria over the war in Iraq.
But on Tuesday, White House spokesman Ari Fleischer kept up the pressure, saying "the focus is on Syria because Syria is the nation that is harbouring Iraqis" - a reference to the US claim that some of Saddam Hussein's allies may have fled to the country.
Also on Tuesday, Defense Secretary Donald Rumsfeld confirmed a pipeline had been "shut off", but said no Iraqi infrastructure had been destroyed.
He said he did not know whether all deliveries from Iraq to Syria were now halted.
Iraq has long been suspected of illegally exporting oil to other countries.
Earlier, US Secretary of State Colin Powell appeared to soften previous threats to Syria, repeating that he had "concerns" about Syria, but saying there was "no list, no war plan right now to go attack someone else".
A statement released by the Syrian Government condemned US "threats and falsifications", saying that the "escalated language of threats and accusations by some American officials against Syria" was aimed at "damaging its steadfastness".
"The cabinet rejected these accusations and allegations and saw them as a response to Israeli stimulus and a service to its [Israel's] goals and expansive greed," the statement added.
Israel and Syria
Ties between the US and Syria have long been strained by US support for Israel and Syria's backing of the Lebanese group Hezbollah and radical Palestinian groups, which Washington considers "terrorist" organisations.
Syrian relations with Israel did not look any better on Tuesday.
Israeli Prime Minister Ariel Sharon, in a newspaper interview, called Syrian President Bashar al-Assad "dangerous", with "impaired judgement", and urged the US to increase pressure on Syria.
Sharon: urged the US to apply "heavy pressure" to Syria
Meanwhile, Hezbollah's al-Manar TV quoted the group's secretary-general as saying no country had the right to interfere in Syria's internal affairs.
He was responding to US criticism of Syria for allowing Hezbollah militants refuge in Damascus.
The US said on Monday it might impose economic, diplomatic and other unspecified sanctions against Damascus if President Assad failed to take what it called the right decisions.
Mr Rumsfeld said that Syria had conducted chemical weapons tests in the past year.
That fuelled global speculation that Syria was next on the Pentagon's list for military action.
However, both Spain and the UK, crucial US allies in the war in Iraq, have declined to support the US over Syria.
UK Foreign Secretary Jack Straw, on a visit to Central Command in Qatar, refused to back Washington's line, saying Syria was run by "intelligent people who have the future interest and welfare of their country at heart".
Spain - another key US ally in the Iraq war - said Syria was a friend of Spain and ruled out military action against Damascus.
UN Secretary General Kofi Annan has expressed concern that recent statements about Syria may further destabilise the Middle East, while the Secretary General of the Arab League, Amr Musa, said he was astounded by the threats.