* 'Sinners' leads with 16 Oscar nominations

* Security tight amid Iranian threat warning

* Chalamet, DiCaprio, Jordan among best-actor nominees

* Conan O'Brien to host a second time

By Lisa Richwine

LOS ANGELES, March 15 (Reuters) - Hollywood rolls out

the red carpet for Sunday's Oscars, the film industry's highest

honors, with an unusually open best-picture race that pits

vampire hit "Sinners," the leader in nominations, against the

darkly comic thriller "One Battle After Another."

Security for the ceremony at the Dolby Theatre will be

tight. Organizers said they were working closely with the FBI

and Los Angeles police after a federal warning of a possible

Iranian threat against California, though authorities have cited

no specific or credible danger to the Academy Awards.

Hosted by Conan O'Brien for a second year, the festivities

will feature a wide-open contest led by "Sinners" with 16

nominations -- a record number in the nearly 100-year-old

history of the Oscars -- as Hollywood grapples with geopolitical

tensions, industry consolidation and anxiety over artificial

intelligence.

The show, starting at 7 p.m. ET (midnight GMT), will be

televised live on Walt Disney's ( DIS ) ABC and streamed on

Hulu. Performers will include the real-life singers of HUNTR/X,

the fictional band in animated film nominee "KPop Demon

Hunters."

The glitzy celebration, Hollywood's most over-the-top gala

of the year, will take place as the U.S. wages war on Iran.

O'Brien said he planned to touch on current events but his

primary mission was to make people laugh and feel at ease.

"My job is to hit this very, very thin line, I think,

between entertaining people and also acknowledging some of the

realities," he told a press conference on Wednesday. "All I can

say is I'll use my best judgment."

The ceremony masks the unease in the film business over

where movies are being made as studios chase tax incentives and

lower costs elsewhere in the U.S. and overseas, weakening

Hollywood's grip on production.

Warner Bros., the studio behind "One Battle" and

"Sinners," is in the process of being sold to Paramount Skydance ( PSKY )

in a deal that will narrow the ranks of major film

distributors. A media watchdog group, Free Press, circulated a

roving billboard around Hollywood over the weekend airing its

opposition to the merger.

Workers in front of and behind the camera are worried

artificial intelligence will limit job opportunities and stifle

creativity and risk-taking.

A POTENTIAL FOR SURPRISES

This year's awards contest holds an unusually high potential

for surprises. The race for best actor is an especially

unpredictable one, pitting Timothée Chalamet against Leonardo

DiCaprio and Michael B. Jordan.

Chalamet had been considered a frontrunner for his acclaimed

performance as a ping-pong hustler in "Marty Supreme," but his

prospects seemed to dim over an awards-season campaign featuring

a streetwear line and a giant blimp and remarks dismissing

ballet and opera.

"One Battle After Another," starring DiCaprio as a one-time

political radical now parenting a teenager, was seen as the

frontrunner for best picture after stacking up trophy after

trophy at recent ceremonies.

But "Sinners," a celebration of blues music and Black

culture in the Segregation-era U.S. South starring Jordan, made

a late surge with a win this month at the Actor Awards.

Jessie Buckley is considered a lock for best actress for her

portrayal of Agnes Hathaway, the wife of William Shakespeare, as

the couple navigate the death of their 11-year-old son in

"Hamnet."

Awards experts say the rest of the top categories are up for

grabs.

Winners of the gold Oscar statuettes are chosen by the

roughly 10,000 actors, producers, directors and ‍film

craftspeople who make up the Academy of Motion Picture Arts and

Sciences.

The Academy took steps this year to try to ensure voters

have actually watched the movies they are voting on. The online

balloting system for the first time tracks whether a voter has

streamed each movie. Voters, however, can check a box to say

they watched the movie elsewhere outside the Academy website.