Oman’s plan to build a $1 billion natural-gas pipeline from Iran is the latest sign that Saudi Arabia is failing to bind its smaller Gulf neighbors into a tighter bloc united in hostility to the Islamic Republic.
West Texas Intermediate crude traded near the highest close in three weeks as the U.S. and Russia sought to defuse the crisis over Ukraine. Brent stayed near a 14-day peak amid persisting supply disruption from Libya.
Oman, which faces Iran across the Strait of Hormuz, said it’s poised to start raising cash for a $3 billion rail line offering an alternative route for oil and freight shipments that funnel through the 21 mile-wide channel.
It would be relatively easy for Iran to make good on its threat to close the strategic waterway that carries oil tankers from the Persian Gulf -- and it would probably hurt itself most by taking such action.
The U.K. doesn’t back a pre-emptive strike on Iran over its nuclear program, Defense Secretary Philip Hammond said even as he warned that Britain may take military action if the Islamic republic carries out its threat to block the Strait of Hormuz.