The US warned Iran Wednesday it will not tolerate any disruption of traffic through the Strait of Hormuz after Iran threatened to choke off the vital Arabian Gulf oil transport route if Washington imposes sanctions targeting its crude exports. The increasingly heated exchange raises new tensions in a standoff that has the potential to spark military reprisals and propel oil prices to levels that could batter a global economy already grappling with a European debt crisis. Iran's navy chief boasted Wednesday that it would be “very easy” for his country's forces to close the strategic Strait of Hormuz, the passage at the mouth of the Arabian Gulf through which a sixth of the world's oil passes daily. It was the second such threat in two days following a warning by Iran's vice president. “Iran has comprehensive control over the strategic waterway,” Adm. Habibollah Sayyari told state-run Press TV, as the country was in the midst of a 10-day military drill near the strategic waterway. The comments drew a quick response from the US. “This is not just an important issue for security and stability in the region, but is an economic lifeline for countries in the Gulf, to include Iran,” Pentagon press secretary George Little said. “Interference with the transit or passage of vessels through the Strait of Hormuz will not be tolerated.” Separately, Bahrain-based US Navy 5th Fleet spokeswoman said the navy is “always ready to counter malevolent actions to ensure freedom of navigation.” Iran's threat to seal off the Gulf, surrounded by six Gulf Cooperation Council states, underlines the depth of worry over the prospect that the Obama administration will go ahead with sanctions over its nuclear program that would severely hit its biggest revenue earner, oil. The sanctions themselves have raised worries that removing Iran's crude from the market will lead to a spike in oil prices. Owing to the tensions, the US benchmark crude futures contract fell 77 cents in early morning trade on the New York Mercantile Exchange, but still hovered above $100 per barrel. US State Department spokesman Mark Toner played down the Iranian threats as “rhetoric,” saying, “We've seen these kinds of comments before.” While many analysts believe that Iran's warnings are little more than posturing, they still highlight both the delicate nature of the oil market, which moves as much on rhetoric as supply and demand fundamentals.
