UPDATE: Oil prices jumped Tuesday as Iran warned the U.S. not to move an aircraft carrier back into the Persian Gulf.
On the first trading day of the new year, the benchmark crude oil price rose 4.2 percent, closing at $102.96 per barrel in New York, the Associated Press reported.
The spike looks like a response to increasing tension between the U.S. and Iran, which on Monday capped 10 days of military exercises by successfully test-firing a domestically produced cruise missile.
Iran followed up Tuesday by warning the United States it would not accept the return of a U.S. aircraft carrier to the Gulf, CNN reported. It was apparently referring to the Fifth Fleet’s USS John C. Stennis, which sailed from the Persian Gulf to the North Arabian Sea last week in what U.S. officials said was a pre-planned movement.
The Obama administration rejected the warning. From the AP:
Pentagon spokesman George Little said the Navy operates in the Gulf in accordance with international law, maintaining "a constant state of high vigilance" to ensure the flow of sea commerce.
"The deployment of U.S. military assets in the Persian Gulf region will continue as it has for decades," Little said in a written statement. "These are regularly scheduled movements in accordance with our longstanding commitments to the security and stability of the region and in support of ongoing operations."
POST Monday, Jan. 2, 5:08 p.m.: Iran is flexing its military muscles in response to new U.S. sanctions.
The country’s navy test-fired a cruise missile Monday in an apparent display of its control over the Strait of Hormuz, a key oil shipping artery, the Associated Press reports. Iran has threatened to close the strait to protest the sanctions, which attempt to prevent it from selling its oil on world markets.
The ground-to-sea missile, dubbed Ghader, has a range of 125 miles—long-range by Iran’s standards, though generally considered medium-range, the Financial Times notes. Either way, it’s long enough to be threaten U.S. forces in the Gulf.
"The Strait of Hormuz is completely under our control,” Iran’s navy chief Adm. Habibollah Sayyari said, according to the AP. “We do not allow any enemy to pose threats to our interests.”
The test culminated 10 days of Iranian naval exercises around the strait. It followed a weekend in which Iran claimed to have succeeded in building a nuclear fuel rod, a significant advance in its controversial nuclear program.
The sanctions appear to be biting hard already. The Washington Post reports Iran’s currency plummeted 12 percent Monday and has lost 35 percent of its value since September. From the Post:
Currency traders stopped writing prices on the whiteboards they use in their shop windows as residents ranging from housewives to lawyers were trying to buy foreign currency.
“I am selling my motorcycle in order to invest it in dollars,” said Mehrdad Allahyari, a computer engineer. “My dream is once to buy a BMW car but now our leaders are even destroying that.”
Original Article
Source: Slate
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