Iran Reportedly Test Fires 9 Missiles And Oil Prices Quickly Rise

The war of words between Iran, Israel and the United States has now reportedly now inched beyond words with news that Tehran sent its foes a pointed show-of-force message by test-firing 9 missiles — which reports say are long-range enough to reach Israel or U.S. bases.

It throws a new monkey wrench into already-heated negotiations and rhetoric over Iran’s nuclear program – and will likely warm up the rhetoric in the U.S. Presidential campaign which already is marked by intense political jockeying on national security issues.

Some international reaction to the tests can be found HERE.

The New York Times reports:

One day after threatening to strike Tel Aviv and United States interests if attacked, Iran’s Revolutionary Guards were reported on Wednesday to have test-fired nine missiles, including one which Tehran claims has the range to reach Israel.

State-run media, quoted by Western news agencies, said the missiles were long- and medium-range projectiles, among them a new version of the Shahab-3 which Tehran maintains can hit targets 1,250 miles away from its firing position.

The reported tests coincide with increasingly tense negotiations over Tehran’s nuclear program, which Iran says is for civilian purposes but which many Western governments suspect is aimed at building nuclear weapons. At the same time, United States and British warships have been conducting naval maneuvers in the Persian Gulf — apparently within range of the launching site of the missiles tested on Wednesday. Israel insisted it did not want war with Iran.

Times Online has a video of the test.

The financial consequences to the world’s increasingly frail economy was felt immediately — in the impact on oil prices — and the prices didn’t go down:

Oil rose $2 to around $138 a barrel on Wednesday, partly recouping a $5 drop in the previous session, after Iran said it had test-fired missiles that could reach Israel and U.S. bases in the region.

U.S. light crude for August delivery was $1.81 up at $137.85 a barrel by 1:50 p.m., off highs of $138.28. London Brent crude was $2.11 up at $138.54.

Oil fell more than $5 on Tuesday on a firmer U.S. dollar and a rally in U.S. shares, which drew cash away from the commodities complex. U.S. crude had slid nearly $10 from last Thursday’s record high of $145.85 a barrel.

Iran’s missile tests at a time of increased tensions over its nuclear programme once again highlighted the geopolitical risks in the oil market.

Meanwhile, in the United States, there was an immediate political response.

Democratic presumptive Presidential nominee Sen. Barack Obama called Iran a “great, great” threat:

Democratic presidential candidate Barack Obama on Wednesday said Iran is a “great threat” and called for tighter sanctions after it test-fired nine missiles.

“Iran is a great threat. We have to make sure we are working with our allies to apply tightened pressure on Iran,” the Illinois senator, who will face Republican John McCain in the November election, said on ABC’s “Good Morning America.”

Iran said it fired the missiles as a warning to the United States and Israel that it was ready to retaliate if they attacked over its disputed nuclear projects.

Obama said that if he were president, he would combine more direct diplomacy with the threat of much tougher economic sanctions.

“I think what this underscores is the need for us to create a kind of policy that is putting the burden on Iran to change behavior, and frankly we just have not been able to do that over the last several years,” Obama said on the CBS “Early Show.”

Republican presumptive Presidential nominee Sen. John McCain said the tests showed the need for a missile shield to counter Iran:

Republican presidential candidate John McCain on Wednesday called for the United States to establish a missile defense shield in Europe to counter Iranian ambitions after that country test-fired nine missiles.

The tests “demonstrate the need for effective missile defense now and in the future, and this includes missile defense in Europe as is planned with the Czech Republic and Poland,” McCain said in a statement.

Iran said it fired the medium- and long-range missiles to warn the United States and Israel that it was ready to retaliate if they attacked over its disputed nuclear projects.

The United States on Tuesday signed a pact to build part of a missile defense shield in the Czech Republic to counter threats from the Middle East. The Bush administration also wants to install missile-defense facilities in Poland, although talks have stalled.

McCain’s rival in the November election, Democrat Barack Obama, called for greater diplomatic engagement with Iran and tighter sanctions — an approach McCain has criticized.

“Working with our European and regional allies is the best way to meet the threat posed by Iran, not unilateral concessions that undermine multilateral diplomacy,” McCain said.