U.S. warns Iran that oil disruption ‘will not be tolerated’ – by Ali Akbar Dareini (Globe and Mail – December 29, 2011)

The Globe and Mail is Canada’s national newspaper with the second largest broadsheet circulation in the country. It has enormous influence on Canada’s political and business elite.

TEHRAN, Iran— The Associated Press – The U.S. warned Iran Wednesday that it will not tolerate any disruption of naval traffic through the Strait of Hormuz, after Iran’s navy chief said the Islamic Republic is capable of closing the vital oil route if the West imposes new sanctions targeting Tehran’s oil exports.

Iran’s Adm. Habibollah Sayyari told state-run Press TV that closing the strait, which is the only sea outlet for the crucial oil fields in and around the Persian Gulf, “is very easy” for his country’s naval forces.

It was the second such warning by Iran in two days, reflecting Tehran’s concern that the West is about to impose new sanctions that could hit the country’s biggest source of revenue, its oil sector. On Tuesday, Vice President Mohamed Reza Rahimi threatened to close the strait if the West imposes such sanctions.

In response, the Bahrain-based U.S. 5th Fleet’s spokeswoman warned that any disruption at the strait “will not be tolerated.”

The spokeswoman, Lt. Rebecca Rebarich, said the U.S. Navy is “always ready to counter malevolent actions to ensure freedom of navigation.”

With concern growing over a possible drop-off in Iranian oil supplies if sanctions are imposed, a senior Saudi oil official said Gulf Arab nations are ready to offset any loss of Iranian crude.

That reassurance led to a drop in world oil prices. In New York, benchmark crude fell 77 cents to $100.57 a barrel in morning trading. Brent crude fell 82 cents to $108.45 a barrel in London.

Western nations are growing increasingly impatient with Iran over its nuclear program. The U.S. and its allies have accused Iran of using its civilian nuclear program as a cover to develop nuclear weapons. Iran has denied the charges, saying its program is geared toward generating electricity and producing medical radioisotopes to treat cancer patients.

The U.S. Congress has passed a bill banning dealings with the Iran Central Bank, and President Barack Obama has said he will sign it despite his misgivings. Critics warn it could impose hardships on U.S. allies and drive up oil prices.

The bill could impose penalties on foreign firms that do business with Iran’s central bank. European and Asian nations import Iranian oil and use its central bank for the transactions.

Iran is the world’s fourth-largest oil producer, with an output of about 4 million barrels of oil a day. It relies on oil exports for about 80 percent of its public revenues.

For the rest of this article, please go to the Globe and Mail website: http://www.theglobeandmail.com/news/world/us-warns-iran-that-oil-disruption-will-not-be-tolerated/article2285014/

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