Iran's Other Potential WMD: Crude Oil As the diplomatic standoff surrounding Iran's nuclear program grows more and more tense, the Islamic nation has another energy source that's a potential weapon in itself: oil. Iran is the world's fourth-largest oil producer, and cutting exports could spark a worldwide spike in oil prices.
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Iran's Other Potential WMD: Crude Oil

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Iran's Other Potential WMD: Crude Oil

Iran's Other Potential WMD: Crude Oil

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The war in Iraq was one of the issues today in a news conference President Bush held in Washington. Here's a little of what he said.

President GEORGE W. BUSH: After five years of war, you know, there is a need to make sure that our troops are balanced properly, that is there is a, threats are met with, um, capability. And that's why we're transforming our military.

CHADWICK: The president played down concerns over a recent Pentagon study suggesting the war in Iraq and deployments in Afghanistan have left the army dangerously overextended. Mr. Bush stressed things are going well in the military.

Pres. BUSH: Retention's high, recruitment is meeting goals and people are feeling strong about the mission.

CHADWICK: But the top U.S. commander in Iraq, General George Casey, today said his troops are "stretched," as he put it. General went on to say those troops are getting the job done and he dismissed suggestions that troop strain is going to cause withdrawals from Iraq. President Bush has promised to make sure U.S. commanders have what they need in Iraq...TEXT: MADELEINE BRAND, host:

Now to the standoff over Iran's nuclear program. Iran says its nuclear plans are for peaceful purposes only. Not too many people buy that and the West may ask for United Nations sanctions. But as NPR's Eric Weiner reports, it's not only nuclear weapons that the world is worried about. Iran has another weapon at its disposal, and that is oil.

ERIC WEINER reporting:

Lots of oil actually. Iran is the world's fourth-largest oil producer. Every day it exports more than two million barrels; twice as much as Iraq. Any move by Iran to cut off or curtail its oil exports would quickly translate into higher oil prices worldwide. Ian Bremmer is President of the Eurasia Group, a consulting firm.

Mr. IAN BREMMER (President, Eurasia Group): That's the reason why markets are already reacting. We see future markets, for example, over $70 a barrel because the psychology is such that people are very concerned this could be a possibility. We've already seen the Iranians more than willing to talk about using oil as a weapon.

WEINER: Should Iran act on that threat, says Bremmer, oil prices could skyrocket to $100 a barrel or about $4 a gallon at the pumps. That may not sound like an appealing prospect, but neither, say some policy makers, is the prospect of a nuclear-armed Iran. Here's Senator John McCain speaking on CBS's Face the Nation.

Senator JOHN MCCAIN (Republican, Arizona): I think that the president's faced with no good option; but I think as opposed to the Iranians proceeding, and some say as short a period as six months, they will have at least acquired the technological capability if not the absolute manufacture of these weapons, and the possibility of Israel feeling they may have to act or them acting against Israel. These are a set of bad options; but if the price of oil has to go up, then that's a consequence we would have to accept.

Mr. FRANK VERRASTRO (Director, CSIS Energy Program): I think, you know, Senator McCain's comments are laudable, I just don't know if they're realistic.

WEINER: That's Frank Verrastro, head of the Energy Program at the Center for Strategic and International Studies. He says that timing is on Iran's side. These days, countries like China and India are thirsty for oil and there isn't a lot of excess supply sloshing around on the global market. That means, says Verrastro, fewer options for the U.S.

Mr. VERRASTRO: You know, 20 years ago if the United States needed additional supply, we got from the North Slope or the North Sea. If it happens now, you're looking at Venezuela or Nigeria, you know, possibly Russia or the Middle East.

WEINER: In other words, not exactly the most reliable source of oil. The recent hurricanes in the Gulf of Mexico also took a bite out of production; but would Iran really follow through on its threat to unleash its oil weapon? After all, half of the Iranian government's revenue and 80 percent of its hard currency come from oil sales. By cutting off those sales, wouldn't Iran be committing economic suicide? Yes, but:

Mr. BREMMER: There are lots of things that the Iranians can do short of actually cutting off oil which are gonna impact gas prices in the United States.

WEINER: For instance, says Ian Bremmer, Iran could threaten the movement of oil tankers in the Straights of Hormuz, a vital waterway that it controls.

Mr. BREMMER: It's not as if we're looking at cutting everything off or doing absolutely nothing. The problem is the Iranians can ramp this up or back as they're pressed, and thus far they've showed every inclination to do precisely that.

WEINER: In other words, Iran's oil weapon may not be as worrisome as a nuclear weapon, but it certainly poses a very real and immediate threat to the world economy.

Eric Weiner, NPR News.

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