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U.S. 5th Fleet Says It Won't Allow Iran to Disrupt Flow of Oil

DUBAI (Reuters) - The U.S. Fifth Fleet said on Wednesday it will not allow any disruption of traffic in the Strait of Hormuz, after Iran threatened to stop ships moving through the strategic oil route.

"The free flow of goods and services through the Strait of Hormuz is vital to regional and global prosperity," a spokesperson for the Bahrain-based fleet said in a written response to queries from Reuters about the possibility of Iran trying to close the waterway.

"Anyone who threatens to disrupt freedom of navigation in an international strait is clearly outside the community of nations; any disruption will not be tolerated."

Asked whether it was taking specific measures in response to the threat to close the Strait, the fleet said it "maintains a robust presence in the region to deter or counter destabilizing activities," without providing further detail.

Meanwhile 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.

In New York, benchmark crude fell $1.99, or nearly 2 percent, to $99.35 a barrel in midday trading.

Brent crude fell $2.20 to $107.07 a barrel in London.

A Saudi oil ministry official told The Associated Press that Saudi Arabia and other Gulf producers are ready to provide more oil if Iran tries to block the strait. The official spoke on condition of anonymity because he was not authorized to discuss the issue. He didn't specify other routes that could be used to transport oil, although they would likely be longer and more expensive for getting crude to the region's customers.

Some analysts think the Iranian threats are more rhetoric than reality. "We doubt political posturing will turn into action," energy consultant and trader Stephen Schork said in a report.

"Shutting down the strait ... is the last bullet that Iran has and therefore we have to express some doubt that they would do this and at the same time lose their support from China and Russia," said analyst Olivier Jakob of Petromatrix in Switzerland.

Iran is the fourth largest oil exporter in the world, according to the Energy Department. Most of its crude goes to Asia, with China its biggest customer. Oil provides half of Iran's revenue. Last year that amounted to about $73 billion.

Oil prices were also undercut on Wednesday by persistent worries about Europe and future demand for oil as the region's economy weakens. The European Central Bank said the continent's banks parked a record $590.72 billion overnight with the ECB, reflecting distrust in the European banking system.

In other energy futures trading in New York, heating oil fell 2 cents to $2.89 a gallon, gasoline fell 4 cents to $2.65 a gallon and natural gas was virtually unchanged at $3.12 per 1,000 cubic feet.


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