U.S. NAVY WON'T LET IRAN SHUT GULF, WILL DEFEND SHIPS
By Ola Galal
July 2, 2008
ABU DHABI -- The United States will not allow Iran to block the Gulf, which carries crude from the world's largest oil exporting region, and would defend its ships in the waterway, the U.S. Navy's Fifth Fleet said on Wednesday.
"I believe . . . Iran will not attempt to close the Strait of Hormuz and we will not allow them to close the Strait of Hormuz. I can't say it anymore clearly than that," Vice-Admiral Kevin Cosgriff, the commander of the U.S. Navy's Fifth Fleet, told a conference on Gulf naval security in Abu Dhabi.
The head of Iran's Revolutionary Guards said in remarks published last week that Tehran would impose controls on shipping in the Gulf and the strategic Strait of Hormuz if it was attacked.
Fear of an escalation in the standoff between the West and Iran, the world's fourth largest oil producer, has helped propel oil prices over $140 a barrel.
Speculation about a possible attack on Iran because of its nuclear program has risen since a report last month said Israel had practiced such a strike.
Western powers say they fear Iran is seeking to develop nuclear weapons under cover of a civilian nuclear program. Tehran says the work aims to generate power.
"Regardless of what might precipitate an entity or a country to attempt to close the strait . . . it is an international affront that is saying to the world that the nearly 40 percent of the world's [ship-borne] oil and the significant amount of natural gas which goes through the strait is now being held hostage by a single country," he said.
"I think the international community would find its voice rapidly and insist that whoever was attempting to do this cease and desist."
There have been repeated incidents in the Gulf, where the Fifth Fleet is based, in which the U.S. ships have come close to skirmishing with approaching boats in the busy waterway.
A cargo ship hired by the U.S. military fired warning shots at approaching boats in the Gulf in April, underscoring regional tensions. In January, the United States said five small Iranian speedboats aggressively approached three U.S. Navy ships in the start and warned they could explode.
Iran said its boats were simply trying to identify the U.S. vessels and military experts have since said the warning may have come from an independent radio operator.
Asked whether he was worried such incidents could escalate, Cosgriff said U.S. naval officers would defend their ships.
"There is not a captain or admiral in the United States Navy who does not know we buried 20 sailors to successful small boat attacks against our ships . . . over the last eight years," he said.
"There is not a captain or admiral in the United States Navy who is not ready to defend his or her ship to their utmost capability."
Part of the problem, he said was that it was not clear who was in control of the Iran's Revolutionary Guard naval activities -- Tehran or local commanders.
"I am concerned about that country's ability to control its own armed forces and in this case the Revolutionary Guard forces and I think the region should be concerned about that," he added.
(Writing by Ola Galal; Editing by Dominic Evans)
REPORT: IRAN WARNS AGAINST MILITARY ACTION
By Nasser Karimi
July 4, 2008
TEHRAN -- Iran would consider any military action against its nuclear facilities as the beginning of a war, the country's top Revolutionary Guards commander said in remarks published Friday.
Gen. Mohammed Ali Jafari's comments, carried by Iran's official news agency, come as speculation of possible military action against Iran's nuclear facilities mounts. The U.S. has said all options are on the table, and there are worries that Israel might be considering a unilateral strike. Both countries, which accuse Iran of seeking to develop nuclear weapons, say they favor a diplomatic solution.
Jafari said any country that attacks Iran would regret doing so.
"Any action against Iran is regarded as the beginning of war," Jafari said late Thursday, according to the IRNA news agency report. "Iran's response to any military action will make the invaders regret their decision and action."
In a newspaper interview last week, Jafari warned that if attacked, Iran would barrage Israel with missiles and choke off the strategic Strait of Hormuz, a narrow outlet for oil tankers leaving the Persian Gulf.
However, the general was also quoted as saying that he thinks a strike by Iran's adversaries is unlikely.
Iran's top diplomat, Manouchehr Mottaki, told the Associated Press in New York on Wednesday that the United States and Israel would not risk the "craziness" of attacking his country and possibly provoking a wider Middle East war or driving oil prices into uncharted heights.
An Israeli military exercise last month was seen as a strong warning to Iran. The U.S. and Israel say Iran's nuclear program is a cover for weapons production, while Iran insists it is only for power generation.
Mottaki called the speculation of a military strike part of "psychological warfare," according to Friday's IRNA report.
Iran's foreign minister has also signaled a willingness to restart talks with the West.
"Tehran is ready to settle Iran's nuclear issue in a comprehensive agreement," Mottaki was quoted as saying Thursday by the Web site of Iran's state TV.
The five permanent members of the U.N. Security Council -- the United States, Britain, France, China, and Russia -- as well as Germany have offered new talks if Iran signals it is prepared to suspend its enrichment of uranium.
OIL IS STEADY NEAR RECORDS AS INVESTORS SEEK STOCKS ALTERNATIVE
By Grant Smith
July 4, 2008
Crude oil traded little changed near records above $145 a barrel as investors purchased commodities as an alternative to flagging equities markets.
Oil has set new highs the last three days as money managers bought futures, shunning stocks as global equity indexes fell for a fifth week. Crude may rise further next week, according to analysts surveyed by Bloomberg. Some cited the risk Israel may bomb Iran, starting a conflict that cuts supply from OPEC's second-largest producer.
"Investment demand has been driving prices higher," Eugen Weinberg, an analyst at Commerzbank AG in Frankfurt, said in a television interview. "Longer-term pension funds, investment funds, but also banks and insurance companies are pouring their money out of the equity market, out of the U.S. dollar and into commodity markets and especially oil."
Crude oil for August delivery was at $144.99 a barrel, down 30 cents, in electronic trading on the New York Mercantile Exchange at 10:03 a.m. London time.
Futures yesterday climbed to a record $145.85 a barrel. Prices have risen 3.6 percent this week and more than doubled in the past year. NYMEX electronic trading continues today as other U.S. markets are closed today for the Independence Day holiday.
The fewest Americans in three years will travel over the July 4th weekend as record gasoline prices and a slowing economy force consumers to curtail spending, according to AAA, the largest U .S. motoring group. U.S. gasoline demand, which typically rises at this time of year, fell a tenth time in the week to June 27, according to data from MasterCard Inc.
Brent crude oil for August settlement was at $145.90 a barrel, down 18 cents, on London's ICE Futures Europe exchange at 9:58 a.m. London time. Futures climbed to $146.69 yesterday, the highest intraday price since trading began in 1988.
It traded higher than its U.S. equivalent for a third day, at a premium of 85 cents, on expectations that seasonal maintenance this month will curb output from North Sea fields.
Iran said today it will consider any attack on its nuclear facilities as an act of war and retaliate, according to the state-run Islamic Republic News Agency. Speculation has mounted that Israel may strike OPEC's second-largest producer after U.S. presidential elections in November.
"Rumors of an Israeli attack on Iran in coming months and a weak dollar are keeping the crude-oil bull alive," said Mike Armbruster, co-founder of Altavest Worldwide Trading Inc. in Laguna Hills, California.
The dollar has declined 7 percent against the euro this year, encouraging investors to buy commodities as a hedge against a weaker U.S. currency.
Tropical Storm Bertha, the second named storm of the Atlantic hurricane season, has formed in the far eastern Atlantic Ocean, near the Cape Verde Islands, according to the U.S. National Hurricane Center. The storm was moving west at about 14 miles per hour. Hurricanes and storms in the Atlantic during summer months threaten Gulf of Mexico oil production.
The Organization of Petroleum Exporting Countries increased production 1 percent in June to 32.52 million barrels a day as Saudi Arabian output rose to a two-year high, a Bloomberg News survey showed.
The world has as much as 5 trillion to 7 trillion barrels of oil yet to be developed, located in "challenging" areas or acreage currently closed to exploration, Saudi Arabian Oil Minister Ali al-Naimi said yesterday. Saudi production increased 280,000 barrels to an average 9.53 million barrels a day last month, the highest since March 2006.
"The limits to future supplies have more to do with politics than with geology and resource availability," al-Naimi said in Madrid, speaking at the World Petroleum Congress, where he was receiving an industry award. Concern over supply can be overcome by allowing "explorers to explore and find hydrocarbons where they aren't allowed," he said.