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Iran threats to US rattle oil markets

world Updated: Jan 05, 2012 02:12 IST

Iran escalated its war of words with the United States 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, General Ataollah Salehi, who appeared to threaten a US 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 US 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.

US 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.

The Iranian currency, the rial, slipped to unprecedented lows against the dollar on 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 Barack Obama last week targeting the central bank itself.

In addition, the European Union is expected to approve new sanctions at a meeting on January 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.

In exclusive partnership with The Washington Post.