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Threats by the Iranian government to close the strait of Hormuz, through which ships carry about 17 million barrels of oil a day, caused oil prices to climb in the first days of the new year. The price for benchmark crude rose 4.2% on Tuesday to end at nearly $103 a barrel. Discussions by the EU last week to impose sanctions on Iranian oil exports triggered the threat to close Hormuz. The EU cited non-cooperation from Iran on its nuclear program as the reason for proposed sanctions. This week Iran’s continued warning is also linked to plans by the US Navy to return an aircraft carrier to the Persian Gulf. The ship, the USS John C. Stennis, moved from its post in the Persian Gulf during 10 days of Iranian Naval drills that concluded yesterday. Iran last week accused the US of using the USS Stennis to spy on its military exercises. A US State Department spokeswoman characterized Iranian hostility as, “increasing evidence that the international pressure is beginning to bite there and that they are feeling… isolated.” There is a consensus that closing the strait is not a viable option for Iran. Current EU discussions on sanctions come on the heels of action by the US Congress to deal a blow to Iran’s economy. Included in the controversial $600 million Defense Authorization Act passed by Congress last month, and quietly signed into law by President Obama on New Year’s Eve, is a provision that allows sanctions against financial institutions that do business with the Iranian Central Bank. On Monday the Iranian Rial fell 14% in value against the US Dollar from Saturday. The value of the Rial against the Dollar has fallen 60% since December 2010.

GUEST: Reese Erlich, veteran freelance foreign correspondent, recently traveled across Middle East on assignment for The Guardian (London), Christian Science Monitor and ABC (Australia) Radio. He is also the author of “The Iran Agenda: The Real Story of U.S. Policy and the Middle East Crisis” and his latest book is called “Conversations with Terrorists: Middle East Leaders on Politics, Violence, and Empire.”