disrupt the distribution of oil through the strait of hormuz if that was to happen she has warned about some serious financial problems for europe and for the rest of the world now should we see a rainy and oil production be disrupted in this way saudi arabia of course the largest producer of oil in the world of said they can increase production by twenty five percent we're also hearing from libya that they can chip in and take up some of the slack however guard warning should this happen should we see such a major rise in the price of apparel of oil then all of the good work that's been so far in europe with regard to dragging the economy kicking and screaming back from the state it was in following the financial crisis would all be undone and we could see a potential new recession hit europe well the reason that all of this is come about is due to the the ongoing standoff between iran and the west over the reigning in nuclear program now both the united states and the e.u. have imposed sanctions on iran to try and get them to abandon their nuclear program a group of of european countr

that could close the strait of hormuz pretty quickly. nna: that's a scary thought to think about, especially because the aircraft carriers and other ships carry so many of our men. quick thought, doug mcfarland was on our show and said if he could give the president any advice it would be to park aircraft carriers, more than one, off the coast of iran and just sit there. mitt romney had an op-ed piece in the "washington post" that said something similar this week. my question for you, is it about numbers? you mentioned the number of the ships an wanting to see them big, you know, versus small in a time like this, but is it about the numbers or is it about the real threat to use those ships if need be? >> well, you know, there's a saying in the military that quantity has a quality all of its own. now, there was also the abraham lincoln, another carrier parked outside of the arabian sea doing operations for enduring freedom for afghanistan. that's also part of the fleet. but that was on the other side of the strait of hormuz. i have no doub

. >> what about iran and the strait of hormuz? >> we might decide to cut off their oil shipments. that is a possibility as one of the options. it is kind of ironic they are threatening to close the straits of hormuz. they cannot if we do not want them to rea. our milli terry capability is strong enough they could not do it without -- our military capability is strong enough they could not do it without our will. a blockade is a possibility if the world is willing to understand iranians nuclear weapons is such a threat to world peace that it is willing to release of iran -- to really stop iran by stopping the oil flow. stopping the oil flow with the use of the blockade, it would not be iran blocking the streets of hormuz. it would be the world naval fleet telling them we have other sources of oil and we're going to tighten the screws by not letting them export oil. that is one option that needs to be considered. >> many critics will say, why should israel have a monopoly on nuclear arms in the middle east question of what is your answer? >> one is the recent experience of the holoca

about 20% of the world's supply moves through the strait of hormuz. out half of that, you have relatively short-term implications in terms of being able to redirect the supplies with other pipeline systems. that still leaves you about 8 million barrels a day of a disruption. that would create a very substantive amount of an impact on price, upward impact on price. if you just took iran offline, their exports are a little more than 2 million barrels a day. we have the capacity globally to satisfy the 2 million barrel a day shortfall for about 24 months. it depends how dramatic and how durable it is. our military has made it clear the strait of hormuz blockage would be a very momentary period. >> if prices are this high, where do you want to be exposed to in terms of the investment part of this story? let's say hypothetically prices stay where they are, and we continue in 2012 with an elevated price of oil. >> okay. maria, in that con ex the, if they stay where they are, and there's a belief in the market that it will stay at these levels, you've got the

and iranian threats to close the strait of hormuz drove much of that increase. when you look at figure 2, and i know this has been an issue that senator franken has looked at, given the up side commodity investments have increased. not unlike what occurred in 2008 and 2007. the bottom line with the near term the current psychology of the market is supportive of keeping prices at a higher level. i think the psychology is important. you look at prices the old fundamentals supply, demand and inventory. now we're looking at current prices, future prices, weather, crude oil quality and this idea of breaking market momentum is really important when you see ups and downs in the market. forecasted as we move through the year. and the potential for real disruption trets on going supply disruptions in south sudan, russia, yemen, canada, china, syria, the north sea and nigeria and potential dislocations as well in places like brazil and iraq. these will all continue to push upward pressure even as we see increases coming out of the sa united states. in addition in the afte

threats with military exercises, the oil market has jumped when they threatened to close the strait of hormuz. it's worth reflecting on that because ll exporters, the country most punished by that is iran which does not have the same financial wear with all of the other exporters and the other thing about that threat it's kind of a classic threat, threat at any united states, to threat but th look closely at their numbers because actually china depends more on strait of hormuz than we do. and it was the chinese premier who reminded tehran to avoid what he called extreme action involving the strait. so, the question is how to move the market into balance as the effort to reduce some significant chair of iranian oil exports now takes place. without, without driving up the price of oil. saudi arabia play as key role. there's an article today by the saudi oil minister, i think it's in today's financial times, describing what th extra spare capacity and what was note worthy was this paragraph about how their inventories all around the world are full, that is actually good news. but what haso repla

iran has threatened our carriers from transiting the strait of hormuz. we've done it anyway and so far there haven't been any incidents. but they do have land-based missiles, swarming boat attacks. is there anything different you're doing this time around and capabilities you're bringing to bear to handle this sort of a delicate situation? >> i wouldn't want to get into exact capabilities we have versus their capabilities. i will tell you we honor very much what they say. we also sail the seas within our freedom of navigation rights as we always have. so as you've seen here in the lincoln carrier strike group as well as ourselves when we get there, when required, we will transit through the strait of hormuz, the iranians have become accustomed to seeing that. they come out and see us, we see them. thus far it's been very professional mariners respecting each other's water space. so i don't anticipate that to change here in the near future. but make no mistake about it, we are aware of the threat and we honor it. >> there's considerable debate in washingt

independence so we are free of the middle east. [ applause ] >> when the iranians practiced closing the straits of hormuz which one out of every five barrels of oil flow, the short term answer is the u.s. navy and air force and ultimatum, the closing the straits would be an act of war and their government would cease to exist. [ applause ] >> but the long term solution is to create american energy independence so we could say to china, india and europe, you have a problem in the straits of hormuz we hope you can solve it, we're not in charge of it. [ applause ] now, the fact is that 2.50 is attainable. governor romney came to town and said i was pandering. by picking that. and i just want to explain to the governor, no, this is called leading. [ applause ] leaders create large goals, leaders create a vision of a better future, leaders arouse the american people to do great things. leaders believe the american people could easily achieve energy independence if the government got out of the way. [ applause ] >> so if your friends ask you why we are emphasizing $2.50 and is it practical, first of all go to

reacting to being cut off by the swift banking system iran is now threatening to block the strait of hormuz a major global oil shipping now that warning comes as u.s. and israeli intelligence agencies the cia and mossad admit that iran hasn't yet decided to develop nuclear weapons but let's discuss this in depth and i would preserve russian he's a political analyst and historian joining me live in london where the wrongs pretty frightening for quite a while to shut down the strait of hormuz could we really see this happening. well i think what we're seeing at the moment has been is the culmination of a long term that lived on zone of us to force the iranian government and what corner to force them into a position where they're left with an invidious choice between on the one how into steer a course between on the one hand seeming to be bullied and giving in and appearing weak and on the other hand alone themselves to be provoked and allowing themselves to be forced into a confrontational position gives reasons for going with these financial story just to ask the reason for pushing iran into

it left norfolk today headed for the strait of hormuz. the enterprise has a storied 52- year history, playing a permanent role in the cuban missile crisis and serving in the vietnam war, operations desert fox, enduring freedom. it's the first aircraft carrier ever deployed. >>> on tuesday, voters in alabama and mississippi will have their say and the candidate will the most approved may be mitt romney. here's the latest. >> reporter: primary has been dominated by tight races and more of that drama is surrounding the tuesday primaries in alabama and mississippi. today rick santorum continued to take aim at mitt romney, campaigning in tupelo, mississippi he responded to claims about the romney camp that santorum can't nail down the delegates he needs during the remaining primaries. >> establishment is trying to force a moderate republican from massachusetts down the throats of the american people, and if we have to go to a convention, we'll win the convention. i have no doubt about that. >> reporter: romney, who has no events scheduled toda

the strait of hormuz could be choked off. oil prices stand at the edge of another major break-out.g to lean harder, or is this just going to be political -- >> we're going to find out by sunday and certainly by monday, larry. we have heard some tougher talk coming out of the pentagon just yesterday. the president is starting to get out in front of this. i'm hearing stories that staff -- the israeli staff and american staff are getting together. we still don't know when the united states says a nuclear weapon or when the obama administration says a nuclear weapon is unacceptable, an iranian nuclear weapon is unacceptable. what does that mean? does that mean when they finally put the bomb together? does that mean when they've gotten the ability to enrich to 90% uranium which would allow them to develop a bomb? we need to know more about this. this issue is coming to a crisis. i think the president has to lean much more further forward in his stir up on this issue, and i would be great if we could have the israelis and the americans have a meeting of the minds on how we move forward o

the increase is driven by the climbing price of oil and iran's threat to shut down the strait of hormuzome experts are ppedicting as prices will hit 4.25 a gallon durrng the summerrdrivinn season. thiss car looks ast -- even when it's standing stilll the ferrari f-12-berlinetta will replace the 5-99 and will be the automaaer's fastest street car ever. pricing on the new model has not yet been price foo thh 5-99 is about 310-thoosaad dollars. ferrari will unveil its new top-of--he-line vehicle at the geneva motor show nexx month. for buuiness brief, i'm edgar cnn.scriit-----nd----- coming upp.. snookie is back in the headlines... but not for her antics n "jersey shooe."why somee ay... she needs to hhng up her partying ways.

. >> but at the end of the day, it's much more -- oil is much more sensitive to the straits of hormuz, the potential that iran has to close the straits of her hughes because it's being threatened over its alleged nuclear arms program. so until there are some sort of conclusion on the nuclear issue in iran, would you expect all prices to be underpinned at around these levels? >> yes, i think we'll continue to see a risk premium on oil. if you look at the fundamentals, it would continue to suggest that oil should be trading at closer to $100 a barrel. >> we're talking about brent crude. >> exactly, rather than $123 a barrel which is where it's currently trading. it's unlike we'll see a closure of the straits of hormuz, clearly with 19 million barrels a day passing throe you that critical choke point, anything disruption would have a significant impact on international crude prices. as long as this crisis continues, we'll see crude at elevated levels. >> and the news from saudi arabia that it plans to increase its own oil production by a quarter to 12.5 million barrels a da i from 10 mil

there is a problem in the middle east weather it is the straits of hormuz and that could send oil prices sky rocketing . so the president is faced with a series of challenges that are the natural resolve of his policies. remember this president is so anti-american energy when he was a septemberor in 2007, he introduced a bill to wipe out all information go the u.s. geological sura. and remarkable tep to say let's not even know what our are. >> chris: you noted that is international. how does the president and what could you do differently if you have a divided congress. people are and on both sides of the aisle and what to do about iran that threatened to close the strait of hormuz. you have a problem with decisions on whether to drill and you have a divided congress. they are not easy to work with. what could you do differently working with a divided congress so even your agenda could be passed. >> the president said there is no silver bullets. he could approve the key stone pipe line. that would be $ you i barrels a day of canadian oil going to houston . he could authorize louisiana an

if they are attacked they promise to choke off a precious body of water called the strait of hormuz where oil comes through. they are threatening to block the shipment of the oil. >> stephen: here is another obama failure, keystone, xl pipeline. we wouldn't be department upon ought arabs if we could get the xl pipeline. if he hadn't canceled it, i would be brushing my teeth with gso lean right now. wouldn't that change, bring the price down like tout sweut. >> everyone knows when you bring oil in it goes down. >> the pipeline is years away. we need it for the energy security going forward. i'm for it. >> stephen: what will alternative fuel. >> absolutely and we are. >> stephen: the president is talking talk pouring algae in our tanksen the algae makes fuel that we can burn in the cars. they make -- it's a substitute for ethanol. the way corn turn into ethanol. exxon smoabl developing a commercial scale plant that turns allege yeah into ethanol. >> stephen: you know what i think we should go with? puppies? hear me out. we put peanut butter on the turbine blade and they lick our way to ener

. >> american troops are practicing for action somewhere similar to the straits of hormuz. they are against another war in a volatile region, not wanting another iraq or afghanistan. >> barack obama hopes that his warning will have hit home, because the last thing he needs is a messy conflict in a difficult region in an election year. >> russian police have arrested hundreds of people who were taking part in protests in moscow, in st. petersburg against the election of vladimir putin for president. he had 64% of the votes but people observing say that this was unfair. others say this was an open contest. we have this report from moscow. >> the government promised there would be no crack down tonight. but when some people refused to leave pushkin square, the police moved in in force. in the scrum is alexey navalny, the emerging leader of the protests. otherwise, it had passed off peacefully. moscow was the only place that did not give putin 50% or more of the vote. these people are flexing their political muscle. >> this is just the beginning. this year is going to be very h

iran can close the straits of hormuz at least temporarily. and they may launch missiles against united states forces and their allies in the region if it is attacked. iran could also attempt to employ terrorist circuits worldwide however the agency assesses iran is unlikely to initiate or intentionally provoke a conflict. iranian ballistic missiles and development could range across the region in central europe. iran's new lacks -- space

and they could shut down the strait of hormuz. they are threatening. about the price of oil today. you think about what it would mean if iran is a radical regime that chants death to america! death to israel! they have their hands on atomic bombs. they could use it against any one of us. they could give it to their terrorist proxies to use against any one of us. they could threaten credibly to block the strait of hormuz, which would send the price of oil skyrocketing, not anything that remotely resembles what we have now and they will pocket the dough. these are things that could change the world, like a hinge of history. we could live in another time. we have never had, since the advent of nudlear weapons, a regime that could act with such -- irresponsibility, having those weapons of mass death. i think this is something that we should -- we should talk b. everybody talks about the -- you know, the costs of taking action, to stop iran. i think it's important to start on the cost of not acting to stop iran na world in which the ayatollahs would have ato

the strait of hormuz is the main artery for gulf oil, where in this region nearly 2/3s of the world'sven oil reserves sit offshore or beneath the desert sands. like the human heart, the strait can't operate if it's plugged. >> the market would go towards 150, 200 if we saw that. i think it's in everybody's interest to try to avoid getting there. >> as the u.s. military steps up its maneuvers in the gulf, the racheting up of tensions has pushed crude prices to a ten month high feeding right into prices paid at the pump. at the high security operations center in eastern saudi arabia that controls the flow of crude at the world's biggest oil company, saudi aramco, they are well aware of the high stakes. they signaled that it is prepared to open its taps to add to its 10 million barrels a day of production and replace any loss of output from iran. >> i believe we can easily get up to 11.4, 11.8 almost immediately, in a few days, because already it's turn valves. now to get to the next 700 or so we probably need about 90 days. >> reporter: that action would reposition the kingdom as the sw

war ships to pass through the straits of hormuz, he has been the driving force behind the most successful and lethal counter tarp rimp campaign in u.s. history resulting in the bold decision to send u.s. operations forces hundreds of miles into pakistan to take the risk to take down bin laden and he did. the president has shown that we will do whatever is necessary. to protect our people to protect our allies and to protect our interests, of course, we do not make these decisions lightly. as the president said on this stage, these are the most important decisions that a president must make. of course, we prefer the diplomatic path and as the prime minister himself has said, military action is the last alternative when all else fails. but make no mistake, when all else fails we will compel tehran to change force, that is the kind of benefit that cooperation can bring, that partnership can bring and i believe that the cooperation is going to be essential to confronting the security challenges of the 21st krntry, in confronting the challenges israel will always have the backing of the united

. >> the president is referring to iran's control of the strait of hormuz, a water pathage that controls some 20% of the world's oil. israel go to war with each other. mr. obama also attributes the gas price hike to massive superpower consumption, named by him -- india, brazil, china. >> over the long-term, the biggest reason oil prices will probably keep going up is growing demand in china, end 'ya and brazil. nearly 10 million cars were add indeed china in 2010 alone, 10 year! in one country! >> question -- what do you think of that -- those remarks from the president. >> i think the president is right, john. and i say the immediate cause here is the situation with iran and the united states israel. we have netanyahu coming to the united states. he wants this country to commit itself to go to war to prevent iran from having a nuclear weapons capability. he has support from mccain, in the congress, 38 senators have signed a resolution. it is the rising tensions in the persian gulf, the rising possibility of a collision not only between israel and iran, but the united states and iran, be

what has led to most recent run-up, concerns about the rhetoric over the closing of the straits of hormuznd the conflicts with iran. >> bill: okay. here now fox business anchor lou dobbs. now, look, i don't want to be disrespectful to tillerson, all right? but he says supply and demand drives it and then the next sentence, it's like barney frank talking about fannie mae, well it's the strait of hormuz might close that's why it's up. that's not supply and demand, mr. tillerson, has nothing to do with supply and demand. >> as we have established here for the last three weeks supply is higher, demand is lower. >> bill: in the united states. >> in the united states. and by the way worldwide production is rising twice as fast as demand worldwide. >> okay, so what lou dobbs much supreme courter than bill o'reilly, all right, is saying is that tillerson isn't telling you the truth. that there is plenty of supply and demand is dropping. yet, the price is still going up i say there should be investigation. >> investigation, first should be the stupid and i'm going to be straightforward about this,

the price but not for very long and the fear is there will be a shut off of oil through the straits of hormuz persian gulf there will be stress on the supply situation and that is not a large source for the united states, but it is meaningful but not huge source, it is a huge source for europe and for japan and that would drive up the price over all. people are very worried about tension between israel and iran and that iran is taking out their frustration if they are bombed by closing our trying to close the straits of hormuz and that is legitimate worry and there is reason for this to happen. as your friend before said, at this point, cushing, oklahoma, and other places are overflowing with oil. >>neil: so, what do we do? if the argument has been that the high prices have to come down because we are long in the tooth for gas price spike there is a separate argument the longer this goes on even when the prices go down it will be built into the system the cost of getting goods delivers to stores and the items will carry a price tag regardless of what happens to gas now, right? >>guest: you ar

iran is constantly threatening to make attacks on shipments or to close the strait of hormuz though americanitary and the top brass says we are not going to let that happen. that's currently affecting the price of oil on the international market. no question. if there were an attack, god forbid, if there were an attack on iran or an attack on ships in the strait of hormuz or an international took prevent it, i think we would see more drilling. in 2000 we had 700 drills going. we have 1,900 going today. >> on private land. megyn: thank you both so much. we are getting reports that one of the president's top jobs advisors is secretly rooting for mitt romney to win the white house and is unhappy with the president's economic decisions. pro union demonstrators in wisconsin end up in court after ignoring police and refusing to leave the capital. but wait until you hear what they offered as a defense to their conduct. a "kelly's court" classic next hour. >> like i said earlier, i thought it was an appropriate forum to address our government. it's my understanding. i habe a . i toog nyguil bud i'm

even iran's near threat to close the strait of hormuz boosts the price of oil. as the people in this room know so well, when you run a military organization you look at vulnerabilities. you look at vulnerabilities in potential adversaries but you also look at vulnerabilities of your own force. when i was nominated for this job and began to be briefed on the department of the navy, energy dependence jumped out as one of the biggest vulnerabilities that we have today. and the reason that we are doing what we are doing in energy, the reason that we're moving to alternative energy is that it's a matter of security. it's a matter of national security. it makes us a better military force and with canada providing leadership on alternative fuels as well as fossil fuels, we'll be better partners with each other and with the world. there's a lot more we can do. to improve our defense, to stabilize our energy sources and to create a more secure world. king and roosevelt started us on this course. and it remains the right course for us today together. i think president oba

what has led to most recent run-up, concerns about the rhetoric over the closing of the straits of hormuz with iran. >> bill: okay. here now fox business anchor lou dobbs. now, look, i don't want to be disrespectful to tillerson, all right? but he says supply and demand drives it and then the next sentence, it's like barney frank talking about fannie mae, well it's the strait of hormuz might close that's why it's up. that's not supply and demand, mr. tillerson, has nothing to do with supply and demand. >> as we have established here for the last three weeks supply is higher, demand is lower. >> bill: in the united states. >> in the united states. and by the way worldwide production is rising twice as fast as demand worldwide. >> okay, so what lou dobbs much supreme courter than bill o'reilly, all right, is saying is that tillerson isn't telling you the truth. that there is plenty of supply and demand is dropping. yet, the price is still going up i say there should be investigation. >> investigation, first should be the stupid and i'm going to be straightforward about this, the stupidity o

closing the straits of hormuz. stopping the flow of oil from the gulf. and we remove. we are not going to reopen the the flow of oil unless. do you think israel would launch a strike without the assistance of the us i would almost say the other or i don't think that there is a possibility that israel will say. we need. a firm an american the solution before we strike. it would be very unfair put it to the u.s. asked for such an approval and we would hope so at the best i would say. we don't expect a green light that we can say it was probably a lot of good and yet if the u.s. says it's not going to get involved is or will be in a position that it will have to do with the consequences of a strike i don't know where when you see continues like the answer is no i think the strike will be it will be. one strike base no possibility of israel could be doing to with a military effort against iran the going to last for days or weeks or months we don't have the capability i don't think we have the interest of the group from our point of view we have israel has will have a very

it recently threatened to close the strait of hormuz. it continues to develop ballistic missiles raising legitimate suspicions about the intended use of these missiles as vehicles for a nuclear weapon. and it provides sanctuary for financial backers of al qaeda. now, ladies and gentlemen, these are not the actions of a state that's comfortable with its place in the world. they are the actions of a self-described revolutionary state that is determined to shift the balance of power in the middle east. a nuclear armed iran would pose a threat to israel, saudi arabia, jordan, the united arab emirates and bahrain. it would threaten sea lines of communication and commerce. and it would further be em boldened as arms plif raters as president obama conceited before you yesterday. make no mistake, make no mistake. iran has a goal in mind. one that has pushed for years through terrorism, covert actions and, i believe, through the active pursuit of a nuclear weapons program that would only bring its broader goals within closer reach. as the great th

closing the strait of hormuz. stopping be flow of oil from the gulf. and you remove. we are not going to reopen the the flow of oil. do you think israel would launch a strike without the assistance of the us i would always say the other a good thing there is a possibility that will say. we need. to ferment of america and the solution before we strike. it would be very unfair to put it to the u.s. to ask for such an approval and we will get and so. the best i would say. we don't expect a green light move we can say it was probably a lie. and yet if the u.s. says it's not going to get involved it's always in a position that it would have to do with the consequences of a strike and the you know we will see continue the leg the answer is no i think the strike will be we will be. one strike where there is no possibility of is a good thing you going to do with a military effort against it's going to last for days or weeks or months we don't have the capability i don't think we have the interests of the group from our point of view we have. will have a very limited interest