Meanwhile, the Iranians are engaging in some serious saber-rattling, testing a new high-speed torpedo in the Gulf of Hormez, through which 40% of the world's oil must pass.

Iran successfully tested its second new torpedo in as many days Monday, the latest weapon to be unveiled during war games in the Gulf that the military said are aimed at preparing the country's defenses against the United States.

A spokesman for the elite Revolutionary Guards suggested the new, Iranian-made torpedo was more powerful and capable of going deeper than others in its arsenal.

Gen. Mohammad Ebrahim Dehghani told state television the ship-launched weapon can target submarines at any depth and is powerful enough to "break a heavy warship" in two. He did not give the name of the new torpedo or any details of its speed or range.

The torpedo was tested in the Straits of Hormuz, the narrow entrance of the Gulf and a vital corridor for oil supplies.

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A day earlier, Iran announced it had tested a different new torpedo - the high-speed "Hoot," which means "whale." Iran said the Hoot, moving at up to 223 mph, was too fast for any enemy ship to elude. On Friday, it tested the Fajr-3, a missile that it said can avoid radars and hit several targets simultaneously using multiple warheads.

Israeli and US authorities expressed some scepticism, but oil prices jumped another $2 just in case.