Iran test-fires more missiles in Persian Gulf: reports

Iran reportedly test-fired long-range missiles for the second day in a row Thursday in a show of strength against potential attacks by the U.S. or Israel.

State television reported that the weapons have "special capabilities" and included missiles launched from naval ships in the Persian Gulf, along with torpedoes and surface-to-surface missiles.

A brief video clip showed two missiles fired simultaneously in the darkness.

The news came hours after U.S. Secretary of State Condoleezza Rice warned Iran that Washington will not back down in the face of threats.

"We are sending a message to Iran that we will defend American interests and the interests of our allies," Rice said Thursday in Georgia at the close of a three-day Eastern European trip.

Oil prices jump after threat to close waterway

Wednesday's missile tests were conducted at the Strait of Hormuz, a key waterway at the mouth of the Persian Gulf through which about 40 per cent of the world's oil passes.

Iran threatened to shut down traffic in the strait if attacked.

Oil prices jumped on news of Wednesday's tests, rising $1.44 to $137.48 a barrel in electronic trading on the New York Mercantile Exchange.

Among the missiles tested Wednesday was a new version of the Shahab-3 that officials say has a range of more than 2,000 kilometres and is armed with a more than one-tonne conventional warhead.

With a missile of that range, Turkey, the Arabian peninsula, Afghanistan and Pakistan are within striking distance.

French company pulls plans to invest

Meanwhile, French energy giant Total SA said Thursday it will not invest in Iran because it is too risky.

"The conditions are not present for investing in Iran today," said Total SA spokeswoman Lisa Wiler. "We hope that the political relations will improve so that we can invest."

Total SA had been in talks to develop a liquefied natural gas project linked to Iran's South Pars gas field with Malaysia's Petronas.

The field is being developed with the expectation of producing 26 billion cubic feet of natural gas a day when completed in 2014.

The companywouldn't say whether Total SA was pulling out of South Pars or overall investment in Iran.

Companies under pressure from U.S., allies

The newsraises questions about the future of western involvement in developing gas reserves in Iran, which has the world's second-largest natural gas reserves after Russia.

Total and other companies had been under rising pressure from the U.S. and its allies over involvement in Iran as tensions mount over Iran's nuclear program.

The U.S. and other countries fear the program is aimed at building weapons, though Tehran insists it is for producing nuclear energy.

Chief executive Christophe de Margerie expressed frustration at U.S. pressure on European energy investors in both Iran and Iraq.

"You take two major countries [Iran and Iraq] out of the system and then you say, 'There is not enough oil and gas.' Oh no, surprise, surprise," he was quotedby the Financial Times as saying Thursday.

Also Thursday, Israel showed off its latest spy plane in what defence officials described as a display of strength in response to Iranian war games and missile tests.