IRAN:THE US vowed to defend Israel and its other allies in the Gulf, as Iran carried out its second missile test in two days yesterday.
As the situation worsened in the Gulf, French oil company Total said it would pull out of a large-scale investment in an Iranian gas field - a serious blow to Tehran, which is keen to exploit its gas reserves, and a victory for the Bush administration, which has been seeking to isolate the Iranian government.
A spokeswoman for the company said it was too risky to invest in Iran at present.
Oil prices resumed climbing as Opec said it would not be able to replace any shortfalls if Iran were attacked and removed its crude supplies from the market.
The second volley of missiles was launched by the Iranian Revolutionary Guard Corps. The Pentagon, whose surveillance satellites track such launches, confirmed the second missile tests, which were carried out at night.
Israel responded with a show of strength of its own, staging a display at the country's international Ben-Gurion airport of its new spy and early warning plane, which can reach Iran. Israel also hinted that it would not hesitate to attack Iran's nuclear facilities.
According to official Iranian reports, the weapons tested included long-range Shahab-3 missiles, capable of reaching Israel and US bases in the region. The reports said the missiles had undisclosed special features. But the Pentagon insisted they were only of the short-range variety.
Iran has threatened to shut the Strait of Hormuz, a vital route for Gulf oil exports, if it is attacked. Iran's state media said exercises yesterday involved divers and speedboats, as well as the launch of a high-speed torpedo called Hout. The missile tests and sea operations were an explicit response to Israeli manoeuvres last month, in which aircraft were reported to be rehearsing strikes against Iran's nuclear facilities.
US secretary of state Condoleezza Rice made it clear that the US would step in if Israel were attacked.
"We take very, very strongly our obligation . . . and no one should be confused about that," Dr Rice said during a visit to Georgia.
Israeli defence minister Ehud Barak, speaking at a Labour party meeting, said the country had not balked before "when its vital security interests" were at stake, an apparent allusion to its 1981 air strike that destroyed Iraq's nuclear plant. But he softened his remarks, noting that "the reactions of enemies . . . need to be taken into consideration as well".
US chairman of the joint chiefs of staff Admiral Michael Mullen visited Israel earlier this month for talks with Israeli commanders, and warned publicly on his return to Washington that an Israeli attack would destabilise the region.
Anthony Cordesman, of the Centre for Strategic and International Studies, has said Admiral Mullen's remarks were a clear sign that Israel does not have a "green light" from Washington to launch an attack.
Iranian oil minister Gholamhossein Nozari shrugged off Total's withdrawal, saying the country did not need foreign investment.