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Iran threatens U.S. ships, alarms oil markets

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Iran escalated its war of words with the United States on Tuesday with a warning to Navy ships to stay out of the strategic Strait of Hormuz, remarks that rattled commodities markets and helped send oil prices soaring.

The latest in a series of provocative statements by Iranian leaders was delivered by the Iranian armed forces commander, Gen. Ataollah Salehi, who appeared to threaten a U.S. aircraft carrier that steamed out of Persian Gulf waters last week.

“We warn this ship, which is considered a threat to us, not to come back, and we do not repeat our words twice,” Salehi said, according to the Iranian Students’ News Agency.

The Obama administration brushed aside the threat, but the increasingly bellicose tone — coupled with new economic sanctions on Iran expected to take effect in the coming weeks — helped cause the price of oil to jump more than 4 percent during a day of upbeat economic news. Gold markets closed at their highest level in 10 weeks.

The threat against U.S. ships was the latest in a series of aggressive moves by Iran, which within a week has tested new missiles, boasted of breakthroughs in nuclear technology and vowed to shut down shipping in the Strait of Hormuz in retaliation for Western sanctions over its nuclear program.

U.S. officials attributed Tuesday’s harsh language to Iran’s growing frustration over its faltering economy, which they say is suffering under the weight of several rounds of Western sanctions adopted in the past three years.

Rial at unprecedented lows

The Iranian currency, the rial, slipped to unprecedented lows against the dollar Tuesday, prompting the Central Bank of Iran to flood the local market with dollars. Currency traders have been dumping the rial in advance of even tougher sanctions, including measures signed by President Obama on Saturday targeting the central bank itself.

In addition, the European Union is expected to approve new sanctions at a meeting Jan. 30, including curbs on imports of Iran’s main export commodity, petroleum.

“Frankly, we see these threats from Tehran as just increasing evidence that the international pressure is beginning to bite there,” State Department spokeswoman Victoria Nuland told reporters Tuesday. She said Iranian officials were “trying to divert the attention of their own public from the difficulties inside Iran, including the economic difficulties as a result of the sanctions.”

Iranian warnings Tuesday were directed specifically at the aircraft carrier USS John C. Stennis, which departed the Persian Gulf with its battle group last week in advance of a 10-day military exercise by Iran. Salehi, the Iranian general, boasted that aircraft and drones had shadowed the warship as it left the region and that Iran was prepared to block its return. The Stennis is based at U.S. 5th Fleet headquarters in nearby Bahrain.

U.S. officials and military analysts dismissed the threat as a bluff, noting Iran’s reputation for empty rhetorical threats. A Pentagon spokesman said the Navy would continue to deploy its ships in the gulf “as it has for decades.”

“These are regularly scheduled movements and in accordance with our long-standing commitments to the security and stability of the region and in support of ongoing operations,” said the spokesman, Cmdr. Bill Speaks.

Still, within hours of Salehi’s threat, Iranian news media reported similar comments by Hossein Salami, the deputy commander of Iran’s elite Revolutionary Guard Corps. In a speech covered by the state-owned Fars News Agency, Salami said Iran’s confrontation with the West had “reached a sensitive and critical point.”

“Our position against the enemy has moved from strategic to operational,” he was quoted as saying.

Outside Iran, the prospect of even a temporary disruption in the flow of oil from the region sent shivers through global markets. The Strait of Hormuz is one of the world’s main choke points for crude oil shipments, a corridor through which an average of 17 million barrels of crude oil is shipped daily. The strait linking the world to the oil fields of Iraq, Qatar, Kuwait, the United Arab Emirates and Saudi Arabia is also the main portal for 2.5 million barrels of Iranian oil each day.

Iran has tried to disrupt shipping in the Persian Gulf before. In 1988, it mined the waterway. After a mine blew a 21-foot-wide hole in a U.S. frigate, the United States responded with Operation Praying Mantis, its largest surface-fleet engagement since World War II. The U.S. Navy destroyed three Iranian warships, several Iranian speedboats and two oil platforms.

Many analysts say Iran is unlikely to risk another direct confrontation with the United States. But they say Iran could seek to disrupt oil supplies through indirect action, such as dispatching one of its proxy militia groups to anonymously blow up oil pipelines in neighboring Iraq. Iraq’s largest fields, where international companies have been successfully boosting production, are close to the border with Iran.

Already, fears of conflict with Iran have inflated global oil prices by $5 to $10 a barrel, according to Robert McNally, an oil expert at the Rapidan Group, a Washington consulting firm. He said Tuesday’s surge in crude prices was a response both to Iranian saber rattling and to upbeat economic news, which generally puts pressure on oil prices.

‘Iran premium’

McNally said an “Iran premium” could grow much bigger, depending on how events unfold over the coming weeks.

The United States could soon have three aircraft carriers in the region: the returning Stennis, the USS Carl Vinson and the USS Abraham Lincoln.

“The wheels have begun moving,” said McNally, who served on the National Security Council and the National Economic Council under President George W. Bush. “What’s different” about this situation from earlier sanctions, he said, “is that there are real sanctions touching Iran’s oil jugular.”

Correspondent Thomas Erdbrink in Tehran contributed to this report.

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