The Cost of Threats

Crude Oil Rises as Iran Says U.S. Risks Disrupting Shipments

June 5 (Bloomberg) -- Crude oil rose to the highest in three weeks after Iran's supreme leader said the U.S. risked disrupting oil shipments from the Persian Gulf region.

The U.S. could ``seriously endanger energy flow in the region'' by acting against Iran, Ayatollah Ali Khamenei said yesterday. Iran, the fourth-biggest oil producer, borders the Strait of Hormuz. About 17 million barrels a day is transported through the waterway. Countries along the Gulf produce 27 percent of the world's oil, according to the U.S. Energy Department.

``The Iranians are playing hardball,'' said Steve Bellino, senior vice president for energy risk management at Fimat USA Inc. in New York. ``The U.S. and Europeans are holding firm, so we are heading for a showdown.''

Crude oil for July delivery rose 57 cents, or 0.8 percent, to $72.90 a barrel at 11:39 a.m. on the New York Mercantile Exchange. Futures reached $73.84, the highest since May 11. Oil touched $75.35 on April 21 and 24, the highest since trading began in 1983. Prices are up 32 percent from a year ago.

Regular unleaded is back above $3.00/gallon in my neighborhood after a brief trip into the $2.90's last week. I noticed it was well above $3.10 when I was in Connecticut on the weekend. This is the price we are paying for Bush's sabre rattling.