Iranian Missile Hits Diplomatic Nerve

Iran test fired a new missile today that can deliver a 1-ton warhead on Israel or U.S. bases in the region, hitting a nerve in the tense Middle East as well as in nervous oil markets.

The televised firing of Iran's new Shahab 3 missile, which Iran says can travel 1,250 miles, was a blatant warning that it can retaliate against Israel and the United States if it is attacked.

Israel and Iran have been engaged in an escalating war of words, with Iranian President Mahmoud Ahmadinejad saying Israel should be wiped off the map and Israel warning that it may have to carry out an airstrike to prevent Iran from developing a nuclear arsenal.

The United States, which has bases in the Middle East, has tried to downplay the possibility of a war with Iran but has warned Iran it will not allow it to interfere with oil shipments in the area.

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Iran launched nine missiles during war games today near the strategically vital Strait of Hormuz, a waterway that carries 40 percent of the world's oil supply. One of the missile launches, broadcast on Iranian TV, was a new version of the Shahab 3 missile.

"Our hands are always on the trigger, and our missiles are ready for launch," Gen. Hossein Salami, the Air Force commander of Iran's elite Revolutionary Guards, told Iran's official IRNA news agency today.

In late June, Vice Adm. Kevin Cosgriff, who was then the commander of the U.S. Navy's 5th Fleet, said any attempt by Iran to seal off the Strait of Hormuz would be viewed as an act of war. The U.S. 5th Fleet is based in Bahrain, across the Gulf from Iran.

State Department officials would not confirm the distance the missiles traveled. In February, Iran tested a modified missile in an attempted space launch. While many say that attempt failed, the missile is said to have reached an altitude of 130 miles.

"I'm not going to get into intelligence information about what we know or do/did not know about the kinds of missiles or how many were launched today, but the press reports are that these are medium- and long-range missiles. I'm not sure -- medium and long-range ballistic missiles. I'm not sure in what sense those are defensive weapons," said State Department spokesman Sean McCormack.

Officials did, however, confirm that Iran is expected to take delivery of the SA-20 missile shield system from Russia by the end of the year, contrary to remarks made today by Secretary of Defense Robert Gates.

News of the missile launch and the tough talk surrounding it sent oil prices skittering higher, up $1.80 a barrel to $137.84 in early trading.

The White House condemned the missile test today, saying, "The Iranians should stop the development of ballistic missiles, which could be used as a delivery vehicle for a potential nuclear weapon immediately."

In Israel, Mark Regev, a senior spokesman for Prime Minister Ehud Olmert, told ABC News that Israel "does not seek hostilities with Iran. But it is clear the Iranian military nuclear program and Iran's ballistic missiles program are of grave concern to Israel."

Israel's military sent warplanes over the eastern Mediterranean for a large military exercise in June that U.S. officials described as a possible rehearsal for a strike on Iran's nuclear facilities. The Iranian blast also reverberated on the U.S. presidential campaign trail.

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