As expected yesterday, when the US went out full bore with a Japan approach of McCollum-like strategy of leaving Iran no option but to keep escalating until finally the US has enough public support grounds for a response, in under 24 hours Iran has launched a second missile, this time not a medium-range SAM to a long-range shore-to-sea missile. Needless to say, the US 5th Navy is watching these quite welcome developments with great interest. From Reuters: "Iran said on Monday it had successfully test fired a long-range missile during its naval exercise in the Gulf, flexing its military muscle to show it could hit Israel and U.S. bases in the region if attacked. The announcement came amid rising tension over Iran's disputed nuclear programme which Western powers believe is working on developing atomic bombs. Tehran denies the accusation and last week said it would stop the flow of oil through the Strait of Hormuz if the West carried out threats to impose sanctions on its oil exports." At this point it is glaringly obvious to all but the most confused that the US is consistently pushing Iran to escalate further and further, until such time as the US ships stationed in Bahrain say enough and decide it is time to sink some boats.
"We have test fired a long-range shore-to-sea missile called Qader (capable), which managed to successfully destroy predetermined targets in the Gulf," deputy Navy Commander Mahmoud Mousavi told the official news agency IRNA. Iran earlier said it would test fire two long-range missiles on Monday - Qader and another system called Nour (light) - to display its resolve to counter any attack by enemies such as Israel or the United States."
Where it gets interesting is that in what is a certain show of solidarity for Syria, Iran's Mousavi said observers from the country's closest Arab ally, Syria, would attend the last day of its 10-day naval exercise.
The rest is already well-known:
The European Union is considering a ban - already in place by the United States - on imports of Iranian crude.
The U.S. Fifth Fleet reacted to Iran's threat to stop oil flows, saying it will not allow any disruption of traffic in the Gulf.
The United States and Israel have not ruled out military action against Iran if diplomacy fails to resolve the Islamic state's nuclear row with the West.
Iran said it had no intention to close the Strait of Hormuz.
"No order has been given for the closure of the Strait of Hormuz. But we are prepared for various scenarios," state television quoted navy chief Habibollah Sayyari as saying.
Probably the best advice we have at this point is to keep an eye on what Goldman's commodity research group is saying: if they tell clients to dump Brent, we are probably minutes away from full out war. Until then, the foreplay will continue.