Thursday 29 December 2011

Oil price falls as Saudis trump Iran threat

Oil prices fell on Wednesday, as Saudi Arabia said it will offset any loss of oil from a threatened Iranian blockade of a crucial tanker route in the Middle East.

The U.S. Navy warned that any disruption of traffic through the vital Strait of Hormuz "will not be tolerated."

On Tuesday Iran's vice president said that his country was ready to close the Strait of Hormuz — a vital waterway through which a third of the world's tanker traffic flows — if western nations embargo the country's oil because of Iran's ongoing nuclear program. The head of the country's navy added on Wednesday that his fleet can block the strait if need be. His comments came as Iran held a 10-day drill in international waters near the strategic route, which is 21 miles wide at its narrowest point.

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