Iran’s war games could force U.S. into aggression, oil price

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Iran’s war games could force U.S. into aggression, oil price

Postby styky » 12/ 23/ 11 10:33 am

Iran’s war games could force U.S. into aggression, oil prices could hit $500

Peter Goodspeed Dec 22, 2011 – 10:15 AM ET | Last Updated: Dec 23, 2011 9:17 AM ET
Iran’s nuclear push is rapidly turning into a game of chicken with the world’s economy.

Faced with the threat of growing international sanctions and unprecedented economic uncertainty that has seen the value of its currency halved in recent weeks, Iran announced Thursday its navy will stage a 10-day exercise in the Strait of Hormuz, starting Saturday.

The move, which increases the risk of military confrontation with the United States, has the potential to temporarily choke off oil exports from the Middle East, drive up international energy prices and damage the global economy.

Admiral Habibollah Sayyari, head of Iran’s navy, said submarines, destroyers, missile-launching ships and attack boats will occupy a 2,000-kilometre stretch of sea from the Strait of Hormuz, at the mouth of the Persian Gulf, to the Gulf of Aden, near the entrance to the Red Sea.

“Iran’s military and Revolutionary Guards can close the Strait of Hormuz. But such a decision should be made by top establishment leaders,” he said....................http://fullcomment.nationalpost.com/201 ... -blockade/
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Re: Iran’s war games could force U.S. into aggression, oil p

Postby styky » 12/ 29/ 11 2:08 pm

US Aircraft Carrier 'Spotted' in Iran Wargames Zone
http://www.energy-daily.com/reports/US_ ... e_999.html

Iran Outlines Key Steps And Actors In A Potential Straits Of Hormuz Closure

http://www.zerohedge.com/news/iran-outl ... uz-closure

Iranian Plan To Mine Hormuz Puts US, NATO on Persian Gulf Alert
http://www.debka.com/article/21606/
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Re: Iran’s war games could force U.S. into aggression, oil p

Postby Smaug » 12/ 29/ 11 2:18 pm

Considering the Iranian government relies heavily on oil exports that travel through the Straight of Hormuze for it's spending, it is highly unlikely to make any attempt at a blockade except as a last gasp effort.


If Iran wanted to damage the U.S. they would fire missles at Saudi Arabian oil infrastructure long before attempting a blockade of the straight.
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Re: Iran’s war games could force U.S. into aggression, oil p

Postby mindyrbusiness » 12/ 29/ 11 7:17 pm

http://s1.reutersmedia.net/resources/r/ ... E7BS1AU100
U.S. Saudi fighter jet sale to help offset Iran[/b

WASHINGTON - The United States will sell $29.4 billion in fighter jets to Saudi Arabia in a deal the White House said would support more than 50,000 jobs and help reinforce regional security in the Gulf amid mounting tensions with Iran.

RELATED


Iran warns U.S. over Strait of Hormuz


http://s1.reutersmedia.net/resources/r/ ... E7BS120V00
By Parisa Hafezi

TEHRAN | Thu Dec 29, 2011 6:15pm EST

(Reuters) - A senior Iranian Revolutionary Guards commander said on Thursday the United States was not in a position to tell Tehran "what to do in the Strait of Hormuz," state television reported, after the U.S. said it would preserve oil shipments in the Gulf.

Tehran's threat to block traffic through the crucial passage for Middle Eastern crude suppliers followed the European Union's decision to tighten sanctions on Iran over its nuclear program, as well as accompanying moves by the United States to tighten unilateral sanctions.

Iran's English-language Press TV quoted Hossein Salami as saying: "Any threat will be responded by threat ... We will not relinquish our strategic moves if Iran's vital interests are undermined by any means."

Separately, Salami was quoted as saying by the official IRNA news agency: "Americans are not in a position whether to allow Iran to close off the Strait of Hormuz."

The U.S. Fifth Fleet said on Wednesday it would not allow any disruption to shipping in the Strait of Hormuz, a strip of water separating Oman and Iran.

At loggerheads with the West over its nuclear program, Iran said earlier it would stop the flow of oil through the strait if sanctions were imposed on its crude exports.

The Iranian threat pushed up international oil prices on Tuesday although they slipped back on Wednesday in thin trade.

Analysts say that Iran could potentially cause havoc in the Strait of Hormuz which connects the biggest Gulf oil producers, including Saudi Arabia, with the Gulf of Oman and the Arabian Sea. At its narrowest point, it is 21 miles across.

But its navy would be no match for the firepower of the Fifth Fleet which consists of 20-plus ships supported by combat aircraft, with 15,000 people afloat and another 1,000 ashore.

This is not the first time the Iranians have threatened to disrupt the oil flow in the Gulf, including in 2008 and 2010 when Iran talked about shutting the Strait as retaliation for any military strike on the country's nuclear sites.

Neither the United States nor Israel have ruled out military action if diplomacy fails to resolve a long-running dispute over Tehran's nuclear ambitions.

Israel, widely believed to have the Middle East's only atomic arsenal, has described Iran's nuclear program as a threat to its existence. Iran refuses to recognize Israel.

Tehran says it needs nuclear technology to generate electricity. Iran has been hit by foreign sanctions, including four rounds of U.N. sanctions, over its refusal to halt its sensitive nuclear work.

To show off its military capabilities, Iran launched a 10-day large-scale naval wargames in the Gulf on Saturday.

Iran's state television reported on Thursday the country's surveillance plane filmed a U.S. aircraft carrier during the drill.

"We have filmed and photographed a U.S. aircraft carrier as it was entering the Gulf of Oman," said Iran's Navy Chief Habibollah Sayyari. "The area is under our full control."

(Writing by Parisa Hafezi; Editing by Matthew Jones)
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Re: Iran’s war games could force U.S. into aggression, oil p

Postby styky » 12/ 29/ 11 7:29 pm

Iran-U.S. brinkmanship over Strait of Hormuz escalates near breaking point

Agence France-Presse Dec 29, 2011 – 3:49 PM ET | Last Updated: Dec 29, 2011 4:32 PM ET
By Marc Burleigh

National Post Graphics

TEHRAN — A showdown between Iran and the United States over Tehran’s threats to close the strategic Strait of Hormuz to oil tankers worsened Thursday with warships from each side giving weight to an increasingly bellicose exchange of words.

Iran’s Revolutionary Guards rejected a warning that the U.S. military would “not tolerate” such a closure, saying they would act decisively “to protect our vital interests.”

The tough language came as two U.S. warships entered a zone where the Iranian navy’s ships and aircraft were in the middle of 10 days of war games designed as a show of military might.

But a U.S. navy spokeswoman said later that the aircraft carrier USS John C. Stennis and the guided-missile cruiser USS Mobile Bay had transited without incident on Tuesday, in pre-planned, routine operation.

“Our interaction with the regular Iranian Navy continues to be within the standards of maritime practice, well-known, routine and professional,” Fifth Fleet spokeswoman Lieutenant Rebecca Rebarich said on Thursday.....................http://news.nationalpost.com/2011/12/29 ... ing-point/
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Re: Iran’s war games could force U.S. into aggression, oil p

Postby RedDog » 12/ 29/ 11 7:33 pm

Euro man-pursers who don't want to pay $300/lb for cheese or $25. for a loaf of bread or $675. for a nice bottle of wine as a result of shipping costs will embrace the Alberta Garden of Oil Eden long before oil hits $200./bbl, never mind $500/bbl. American pipeline hold outs will be on their knees, mouths gapping open clawing at our pant flies to get a taste.

Two more USN Warships went through the Strait of Hormuz today with no shortage of air power watching over their passage. This will ultimately be the end of the regime in Iran. Excellent - and THEY encouraged it and set the stage and the timetable. When suicide is in your cultural and religious blood I suppose you just need to do it - for their honor of course. Idiots.
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Re: Iran’s war games could force U.S. into aggression, oil p

Postby styky » 12/ 29/ 11 7:41 pm

RedDog wrote:Euro man-pursers who don't want to pay $300/lb for cheese or $25. for a loaf of bread or $675. for a nice bottle of wine as a result of shipping costs will embrace the Alberta Garden of Oil Eden long before oil hits $200./bbl, never mind $500/bbl. American pipeline hold outs will be on their knees, mouths gapping open clawing at our pant flies to get a taste.

Two more USN Warships went through the Strait of Hormuz today with no shortage of air power watching over their passage. This will ultimately be the end of the regime in Iran. Excellent - and THEY encouraged it and set the stage and the timetable. When suicide is in your cultural and religious blood I suppose you just need to do it - for their honor of course. Idiots.



Here's hoping that the US figures out who the enemy is before they start firing viewtopic.php?f=28&t=150257
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Re: Iran’s war games could force U.S. into aggression, oil p

Postby RedDog » 12/ 29/ 11 7:47 pm

Just tossing this out to stir the pot...

This correction activity - Libya, Iran, Syria, et al... could get the Kenyan zero re-elected. Now today Turkey took out a village in Iraq by "accident". Riiiiiight. Just sayin'.
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Re: Iran’s war games could force U.S. into aggression, oil p

Postby Julian » 12/ 30/ 11 4:12 pm

tell me, what will Iran's behaviour be like once they have nuclear weapons?
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Re: Iran’s war games could force U.S. into aggression, oil p

Postby styky » 01/ 04/ 12 3:10 pm

Oil prices: What happens if Iran shuts down the Strait of Hormuz?

About 35 percent of the world’s seaborne traded oil moved through the Strait of Hormuz in 2011. Energy analysts don’t doubt that Iran could disrupt the flow of oil in the strait if it wants to.....................http://www.csmonitor.com/USA/2012/0103/ ... -of-Hormuz
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Re: Iran’s war games could force U.S. into aggression, oil p

Postby mindyrbusiness » 01/ 04/ 12 5:59 pm

Exclusive: EU agrees to embargo on Iranian crude
http://s1.reutersmedia.net/resources/r/ ... E8031LBY00
y Justyna Pawlak and Parisa Hafezi

BRUSSELS/TEHRAN | Wed Jan 4, 2012 3:38pm EST

(Reuters) - European governments have agreed in principle to ban imports of Iranian oil, EU diplomats said on Wednesday, dealing a blow to Tehran that crowns new Western sanctions months before an Iranian election.

The prospective embargo by the European Union, along with tough U.S. financial measures signed into law by President Barack Obama on New Year's Eve, form a concerted Western campaign to hold back Iran's nuclear program.

Iran says the program is strictly non-military, but Western countries say a November U.N. report shows it has sought to build an atomic bomb. Talks between Tehran and major powers broke down a year ago.

Diplomats said EU envoys held talks on Iran in the last days of December, and that any objections to an oil embargo had been dropped - notably from crisis-hit Greece which gets a third of its oil from Iran, relying on Tehran's lenient financing. Spain and Italy are also big buyers.

"A lot of progress has been made," one EU diplomat said, speaking on condition of anonymity. "The principle of an oil embargo is agreed. It is not being debated any more."

U.S. State Department spokeswoman Victoria Nuland called the EU moves "the kinds of steps that we would like to see not just from our close allies and partners in places like Europe but from countries around the world."

"We do believe that this is consistent with tightening the noose on Iran economically," she said.

A U.S. Treasury official said Tehran's oil revenues could be choked off without disrupting global oil markets.

Treasury Secretary Timothy Geithner will travel to China and Japan next week to discuss U.S. sanctions on Iran and the state of the global economy.

The embargo will force Tehran to find other buyers for oil. EU countries buy about 450,000 barrels per day (bpd) of Iran's 2.6 million bpd in exports, making the bloc collectively the second largest market for Iranian crude after China.

Prime Minister Mario Monti said Italy was ready to back an oil embargo as long as it was imposed gradually and deliveries to repay Tehran's debts to Italian energy firm ENI were exempted.

The news caused a spike rise in oil prices, with Brent crude peaking at nearly $114 a barrel in intraday trading, up nearly $2 from Tuesday's close.

Tehran insisted it would have no trouble: "We could very easily replace these customers," said S. M. Qamsari, International Director of the National Iranian Oil Co.

But the new U.S. sanctions have already made it difficult for Iran to keep its customers, and could force it to offer steep discounts to countries willing to risk doing business with it, hurting its revenues.

Biggest trading partner China, driving a hard bargain, has cut its orders of Iranian oil by more than half this month.

REAL IMPACT

Western countries have imposed various sanctions on Iran for years with little impact. But the latest measures are qualitatively different, directly targeting Iran's oil industry, which forms 60 percent of its economy.

Most traders expect Iran will still find buyers for its crude, mostly in Asia, but it is going to have to offer substantial discounts, cutting back the revenue that the state relies on to subsidize basic goods for its citizens.

Tougher sanctions appear to be having an impact already on Iran's streets, where prices for foodstuffs are soaring. The rial currency has lost 40 percent of its value against the dollar over the past month.

Currency exchanges have shut in Tehran and Iranians have queued to withdraw their savings from banks and buy dollars.

That economic hardship is being felt by the public two months before a parliamentary election, Iran's first since a disputed 2009 presidential vote that led to massive street demonstrations, put down violently by Iran's rulers.

Iran's leaders are anxious to prevent any popular unrest, especially after the Arab Spring revolts last year showed the vulnerability of Middle Eastern governments to street protest.

Iran has warned that any steps to cut its oil exports could cause havoc in international oil markets at a time of global economic pain. In recent weeks it has also resorted to increasingly aggressive military saber-rattling.

Tehran threatened last month to shut the Strait of Hormuz - outlet to the Gulf through which 40 percent of traded oil flows - and on Tuesday threatened to take unspecified action if a U.S. aircraft carrier sails through the strait.

Washington, which has a carrier strike group led by the USS John C Stennis in the Arabian Sea, brushed off that threat and said its navy would continue to sail the strait.

Most analysts dismiss the saber-rattling as a bluff and say they do not expect war.

"There's an anticipation that it might lead to an escalation of military activity in the region, but we think this is overplayed," said Gareth Lewis-Davies, energy strategist at BNP Paribas in London.

The EU diplomats said member countries had not yet agreed on how soon the embargo should take effect and were still debating other possible sanctions.

France has said it wants the EU embargo and other sanctions agreed at a meeting of the bloc's foreign ministers at the end of this month. Paris also seeks a ban on transactions with the Iranian central bank, similar to what Washington has imposed.

The new U.S. financial sanctions, if imposed fully, would make it all but impossible for many refineries to pay for Iranian crude. The law grants Obama the power to issue temporary waivers to prevent shocks in energy markets.

A Turkish energy official said Ankara, which buys about 30 percent of its oil from Iran, was seeking a waiver from Washington for its biggest refiner, Tupras.

Washington says it is discussing with its allies how to implement the measures without causing an oil supply shock.

(Additional reporting by Julien Toyer in Brussels and Peg Mackey in London; Writing by Peter Graff; Editing by Andrew Roche)
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Re: Iran’s war games could force U.S. into aggression, oil p

Postby Ogopogo » 01/ 04/ 12 11:36 pm

http://online.wsj.com/article/SB1000142 ... ran+hormuz

* JANUARY 4, 2012

Iran Won't Close the Strait of Hormuz
Direct hostilities would risk retaliation against Tehran's nuclear-weapons program.

By BRADLEY S. RUSSELL
AND MAX BOOT

Iran threatened to close the Strait of Hormuz last week, in response to U.S. and European Union moves to apply sanctions on its oil industry. Only 21 miles wide at its narrowest point, the strait sees the passage of roughly 28 tanker ships a day, half loaded, half empty. Some 17 million barrels of oil—20% of oil traded in the world—go through this chokepoint. If Iran really could close the strait, it would do great damage to the world economy. But it would also damage its own already shaky economy because Iran relies on the strait to deliver oil exports to China and other customers.

In any case, closing the strait is not nearly as easy as Adm. Habibollah Sayari, commander of the Iranian Navy, would have it. He said that closing the strait is "as easy as drinking a glass of water." Actually it would be about as easy as drinking an entire bucket of water in one gulp.

Iran tried this trick before and failed miserably. In 1984, during the Iran-Iraq War, Saddam Hussein attacked Iranian oil tankers and the Iranian oil-processing facility at Kharq Island. Iran struck back by attacking Kuwaiti tankers carrying Iraqi crude and then other tankers in the Persian Gulf. In 1987, after years of growing disruptions in this vital waterway, President Ronald Reagan responded by offering to reflag Kuwaiti tankers with the U.S. flag and provide U.S. naval escort. Iran shied away from direct attacks on U.S. warships but continued sowing mines, staging attacks with small patrol boats, and firing a variety of missiles at tankers.

On April 14, 1988, the guided-missile frigate USS Samuel B. Roberts struck an Iranian mine; no sailors were killed but several were injured and the ship nearly sank. The U.S. Navy responded by launching Operation Praying Mantis, its biggest surface combat action since World War II.

Half a dozen U.S. warships in two separate Surface Action Groups moved in to destroy two Iranian oil platforms. The Iranians responded by sending armed speedboats, frigates and F-4 aircraft to fire at the U.S. warships.

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AFP/Getty Images

The Iranian navy firing a missile in the Strait of Hormuz on Sunday.

In defending themselves, the American vessels sank at least three Iranian speedboats, one gunboat and one frigate; other Iranian ships and aircraft were damaged. The only major U.S. loss occurred when a Marine Corps Sea Cobra helicopter crashed, apparently by accident, killing two crewmen.

The war all but ended less than three months later when the guided missile cruiser USS Vincennes mistakenly fired a surface-to-air missile at an Iranian passenger airliner that it had mistaken for a fighter jet. The plane was destroyed and 290 people killed. Although this was an accident, the Iranian regime was convinced that Washington was escalating the conflict and decided to reach a truce with Iraq.

The greatest loss suffered by U.S. forces during this whole conflict occurred in 1987 when an Iraqi aircraft fired an Exocet missile that hit the frigate USS Stark, killing 37 sailors and injuring 21. (Saddam Hussein claimed this was an accident.)

The Iranians had little to show for their efforts: Lloyd's of London estimated that the Tanker War resulted in damage to 546 commercial vessels and the deaths of 430 civilian mariners but many of those losses were caused by Iraq, not Iran. While these attacks temporarily disrupted the free passage of oil, they did not come close to closing the strait.

Despite the unveiling of a new antiship cruise missile called the Qader, Iran's conventional naval and air forces—on display during the Veleyat 90 naval exercises in the Persian Gulf which ended Monday— are still no match for the U.S. and its allies in the region. The U.S. alone has in the area two carrier strike groups, an expeditionary strike force (centered around an amphibious assault ship that is in essence a small aircraft carrier), and numerous land-based aircraft at bases such as Al Udied in Qatar, Al Dafra in the United Arab Emirates, and Isa Air Base in Bahrain. The U.S. and our Arab allies (which are equipped with a growing array of modern American-made equipment such as F-15s and F-16s) could use overwhelming force to destroy Iran's conventional naval forces in very short order.

Iran's real ability to disrupt the flow of oil lies in its asymmetric war-fighting capacity. Iran has thousands of mines(and any ship that can carry a mine is by definition a mine-layer), a small number of midget submarines, thousands of small watercraft that could be used in swarm attacks, and antiship cruise missiles. If the Iranians lay mines, it will take a significant amount of time to clear them. It took several months to clear all mines after the Tanker War, but a much shorter period to clear safe passages through the Persian Gulf to and from oil shipping terminals.

Antiship cruise missiles are mobile, yet those can also be found and destroyed. Yono submarines are short-duration threats—they eventually have to come to port for resupply, and when they do they will be sitting ducks. U.S. forces may take losses, as they did with the hits on the USS Stark and Samuel B. Roberts, but they will prevail and in fairly short order.

The Iranians must realize that the balance of forces does not lie in their favor. By initiating hostilities they risk American retaliation against their most prized assets—their covert nuclear-weapons program. The odds are good, then, that the Iranians will not follow through on their saber-rattling threats.

But this heated rhetoric does suggest how worried the Iranians are about the potential impact of fresh sanctions on their oil industry. All the more reason for the Europeans to proceed with those sanctions.

Mr. Russell, a navy captain, is a visiting fellow at the Council on Foreign Relations. In 2010-2011 he was chief of staff to U.S. Navy Central Command/Fifth Fleet in Bahrain. Mr. Boot is a senior fellow in national security studies at the council.
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Re: Iran’s war games could force U.S. into aggression, oil p

Postby Smaug » 01/ 05/ 12 2:09 am

It is useless listening to what minor functionaries are reputed to have said or not said. If Iran was seriously thinking of blockading the Strait of Hormuz, they would not bluster about it in the news papers.

In any case, Iran is allied to China and Russia. The Americans will do nothing about Iran unless they wish to precipitate a third world war.
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Re: Iran’s war games could force U.S. into aggression, oil p

Postby styky » 01/ 06/ 12 12:20 pm

Why Iran could start the next global recession

An oil price shock is on the cards if the Iranians are really prepared to close the strait of Hormuz and start a war – and such shocks always precede recessions............http://www.guardian.co.uk/business/econ ... -oil-price
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Re: Iran’s war games could force U.S. into aggression, oil p

Postby mindyrbusiness » 01/ 06/ 12 12:34 pm

Iran plans more war games in strait as sanctions bite
By Robin Pomeroy http://s1.reutersmedia.net/resources/r/ ... E80512SS00

TEHRAN | Fri Jan 6, 2012 9:50am EST

(Reuters) - Iran announced plans on Friday for new military exercises in the world's most important oil shipping lane, the latest in weeks of bellicose gestures towards the West as new sanctions threaten Tehran's oil exports.

Real Admiral Ali Fadavi, naval commander of the Revolutionary Guards Corps, said exercises next month would focus directly on the Strait of Hormuz, which leads out of the Gulf and provides the outlet for most Mid-East oil.

Iran held a 10-day drill which ended on Monday in neighboring seas.

"Today the Islamic Republic of Iran has full domination over the region and controls all movements within it," Fadavi said in remarks reported by the Fars news agency.

Iranian officials have threatened in recent weeks to block the strait if new sanctions harm Tehran's oil exports, and this week said they would take action if the United States sails an aircraft carrier through it.

The United States, which has a massive naval fleet in the area that is overwhelmingly more powerful than Iran's sea forces, says it will ensure the international waters of the strait stay open. Britain said on Thursday that any attempt to close it would be illegal and unsuccessful.

New financial sanctions signed into law by U.S. President Barack Obama on New Year's Eve are aimed at making it difficult for most countries to buy Iranian oil. The European Union is expected to announce tough measures of its own at the end of the month.

Most traders believe Iran will still be able to find buyers, at least in the short term, for its exports of 2.6 million barrels of oil per day (bpd). But it may have to offer steep discounts that reduce the hard currency revenue it needs to feed its 74 million people.

The sanctions are already having an effect on Iran's streets, where prices have been rising and the rial currency is falling. Iranians have been queuing up at banks to convert their savings into dollars.

The economic hardship comes less than two months before a parliamentary election, Iran's first since a 2009 presidential election that led to mass street protests across the country.

Iran's rulers successfully put down those demonstrations two years ago with force, but since then the Arab Spring has shown the vulnerability of authoritarian governments in the region to public protest fueled by anger over economic hardship.

NUCLEAR PROGRAMME

Washington and its allies are imposing the measures to force Iran to abandon a nuclear program which they say is aimed at producing an atomic bomb. Iran says the program is peaceful.

European Union officials say the EU, which collectively buys about 500,000 bpd of Iranian oil, rivaling China as the largest market, has agreed to impose an embargo halting all imports.

EU diplomats said they are discussing how long they will give member countries to halt purchases, with France, Germany and others wanting the ban imposed within three months but Greece favoring a grace period of up to a year.

China has also cut its imports by more than half in January and February while haggling with Tehran over the size of the discount it wants in return for doing business with it.

Other big buyers, including Turkey and Japan, say they are seeking a waiver from the U.S. sanctions.

The new American law allows Obama to give temporary waivers to allies to continue to buy Iranian oil to prevent a price shock, but to receive the permits, countries are meant to show they are reducing trade with Iran.

Iran has put on a brave face over the sanctions. Foreign Minister Ali Akbar Salehi said on Thursday the country would "weather the storm."

"Iran, with divine assistance, has always been ready to counter such hostile actions and we are not concerned at all about the sanctions," he told a news conference.

But in a sign it is seeking to alleviate the pressure, Salehi said Tehran was interested in resuming negotiations over its nuclear program with Western powers.

Turkey's visiting foreign minister brought an offer from Catherine Ashton, the EU foreign policy chief who negotiates on behalf of major powers.

Talks over Iran's nuclear program collapsed a year ago. Iran has repeatedly offered to restart the talks since then, but has insisted it will not negotiate over its right to continue enriching uranium.

Western countries say talks are pointless unless a halt to enrichment is on the table. Enriched uranium can be used to fuel a reactor or build a bomb.

OIL PRICES IN SPOTLIGHT

After years of sanctions that had little impact, Western countries have adopted a far more direct approach in recent months, with sanctions that explicitly impact the oil industry that provides 60 percent of Iran's economy.

The new U.S. measures would cut off any institution that deals with the Iranian central bank from the U.S. financial system. If implemented fully, it would make it impossible for most countries' refineries to buy Iranian crude.

But Washington has to balance its determination to isolate Tehran with concern that driving its oil off markets will raise prices and hurt the fragile global economy. Brent crude futures hovered above $113 a barrel on Friday, up nearly $7 since Obama signed the new sanctions law.

To ease the impact on markets, the new U.S. measures take effect over several months, and the leeway given to Obama to offer waivers allows countries time to find other suppliers. Saudi Arabia, the world's biggest oil exporter and a foe of Iran, says it will make up for any supply shortfall.

Traders and analysts believe it is unlikely Iran will actually carry out its threats to block the strait.

"We've seen this movie before," said Cliff Kupchan, an Iran analyst at the Eurasia Group. "Neither side wants a war. A lot of this rhetoric is overstated."

Even if it tried, Iran could not blockade the strait for long in a direct challenge to a U.S. fleet led by the giant supercarrier John C. Stennis, accompanied by a guided-missile cruiser and flotillas of destroyers and submarines.

The Combined Maritime Force protecting Gulf shipping also includes other countries such Britain, France, Canada, Australia and the Gulf Arab states, under the command of a U.S. admiral.

Still, Iran has many ways it could provoke a Western response, from missiles within range of U.S. targets in the region, to small boats that could attack a ship near shore, to allied militia in Palestine and Lebanon that can strike Israel.

(Additional reporting Dmitry Zhdannikov and Simon Falush in London, Justyna Pawlak in Brussels and Hashem Kalantari in Tehran; Writing by Peter Graff; Editing by Giles Elgood)
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