DUBAI -- Iran has threatened to destroy U.S. military bases across the Middle East and target Israel within minutes of being attacked, Iranian media reported on Wednesday, as Revolutionary Guards extended test-firing of ballistic missiles into a third day.

Israel has hinted it may attack Iran if diplomacy fails to secure a halt to its disputed nuclear energy program. The United States also has mooted military action as a last-resort option but has frequently nudged the Israelis to give time for intensified economic sanctions to work against Iran.

"These bases are all in range of our missiles, and the occupied lands (Israel) are also good targets for us," Amir Ali Haji Zadeh, commander of the Revolutionary Guards aerospace division, was quoted by Fars news agency as saying.

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Haji Zadeh said 35 U.S. bases were within reach of Iran's ballistic missiles, the most advanced of which commanders have said could hit targets 1,300 miles away.

"We have thought of measures to set up bases and deploy missiles to destroy all these bases in the early minutes after an attack," he added.

It was not clear where Haji Zadeh got his figures on U.S. bases in the region. U.S. military facilities in the Middle East are located in Bahrain, Qatar, the United Arab Emirates, Kuwait and Turkey, and it has around 10 bases further afield in Afghanistan and Kyrgyzstan.

NYT: US sends ships, planes to Persian Gulf as tension mounts

Defense analysts are often skeptical about what they describe as exaggerated military assertions by Iran and say the country's military capability would be no match for sophisticated U.S. defense systems.

'Great Prophet 7' tests
Iranian media reported that this week's three-day "Great Prophet 7" tests involved dozens of missiles and domestically built drones that successfully destroyed simulated air bases.

Iran has upped its fiery anti-West rhetoric in response to the launch on Sunday of a total European Union embargo on buying Iranian crude oil - the latest calibrated increase in sanctions aimed at pushing Tehran into curbing nuclear activity.

Revolutionary Guards commanders have also threatened to block the Strait of Hormuz, through which more than a third of the world's seaborne oil trade passes out of the Gulf, in response to the increasingly harsh sanctions.

Danger zone then and now: Strait of Hormuz

Major powers have said they would tolerate no obstruction of commercial traffic through the Strait, and the United States maintains a formidable naval presence in the Gulf region.

Iran accused the West of disrupting global energy supplies and creating regional instability and says its forces can dominate the vital waterway to provide security.

"The policy of the Islamic Republic is based on maintaining security in the Persian Gulf and the Strait of Hormuz for all ships and oil tankers," Iranian English-language state Press TV quoted the chairman of parliament's national security and foreign policy committee, Alaeddin Boroujerdi, as saying.

The United States and its allies accuse Iran of using its nuclear program to covertly develop all the components required to produce nuclear weapons, accusations the Iranian officials have repeatedly denied.

The world's No. 5 oil exporter maintains that it is enriching uranium for nuclear fuel only to generate more energy for a rapidly growing population.

Oil deal axed
Meanwhile, Kenya on Wednesday canceled a deal to import Iranian oil hours after the U.S. warned the country that it risked being penalized if it sees through the deal which would breach U.S. and European union sanctions, a government official said.

Kenya's Energy Permanent Secretary Patrick Nyoike said Kenya had not signed an agreement but had a memorandum of understanding with Iran to import its oil and was complying with international sanctions on Iran.

The U.S. announced in December that it would penalize banks that do oil deals with Iran, giving countries and the oil markets until the end of June to adjust.

A statement from the U.S. State Department said Wednesday that sanctions will be implemented fully, and they include sanctions against financial institutions from any country, without an exception, if they are found to conduct sanctionable transactions, including those with the Central Bank of Iran.

Nyoike had been quoted this week saying that Kenya has signed an agreement to buy millions of barrels of Iranian oil.

He said he was not aware of the U.S. warning to Kenya about oil deals with Iran.

Nyoike said the cancellation of the memorandum with Iran had nothing to do with accusations that two men believed to be agents of a secretive unit in the Iranian armed forces were planning to bomb American, Israeli, British and Saudi Arabian targets.

Kenyan security forces arrested the Iranians on June 19 and were then led to 33 pounds of RDX, a powerful explosive that could have been used against multiple targets or concentrated in one large bomb. If used together, the explosives could have leveled a medium-sized hotel, officials told AP.

The two suspects — Ahmad Abolfathi Mohammad and Sayed Mansour Mousavi — appeared in a Kenyan court last week, where Mohammad said he had been interrogated by Israeli agents. Israel's embassy said it had no comment.

Reuters and The Associated Press contributed to this report.

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ABOARD THE USS CAPE ST. GEORGE – More than 31,000 ships transit the Strait of Hormuz every year, traveling between the Persian Gulf and the North Arabian Sea. Among those are U.S. Navy warships, operating throughout the region to conduct exercises and to support the war in Afghanistan.

But don’t let the numbers fool you … while transiting the Strait is common, it is far from simple – especially as tensions with Iran continue to rise.

Since the Strait of Hormuz is only about 24 miles wide, the critical waterway is both contentious and dangerous to cross. Countries can claim up to 12 miles off their shores as their own territorial water – and since the strait is wedged between Iran and Oman, it is a particularly tricky zone.

Three U.S. Navy ships traveled through the strait together on Tuesday: the aircraft carrier USS Abraham Lincoln, the destroyer USS Sterett, and the guided-missile cruiser USS Cape St. George. NBC News was there and got a first-hand look at the careful, deliberate Navy maneuver.

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The transit actually began inside the Persian Gulf, went through Oman’s territorial water, traveled through the so-called "knuckle" (the nickname for the narrowest part of the Strait which includes a sharp turn where Oman sticks out), and continued in to the Gulf of Oman and the North Arabian Sea. At a speed that ranges between 20 and 30 knots, the entire route took more than 10 hours to complete. 

Beyond the challenge of navigating the Strait, the recent escalation of rhetoric and increasingly tense relationship between the U.S. and Iran has brought even more concerns for the Navy as they operate in the area. Iran recently threatened to close the strait in retaliation for tighter Western sanctions.

The Iranian Revolutionary Guard Corps Navy operates submarines and war ships throughout the Gulf, and they often send out small boats to harass U.S. Navy ships.

These Iranian boats, which the U.S. Navy calls FIACs, are just small motorboats with mounted machine guns. Despite the fact the U.S. warships literally dwarf these tiny boats, U.S. military officials worry that just one of these FIACs loaded with explosives could do significant damage to a U.S. aircraft carrier. The cruiser and the destroyer provide protection for the carrier – they are the muscle.

On board the USS Cape St. George, sailors manned their stations as early as 2 a.m. to prepare for the day of the transit. Gunners took up their positions around the ship. The Cape St. George also has a massive missile capability (cruise missiles,harpoons, and more), so it was prepared to strike at threats both in the air and on the seas, if necessary.

Around 7 a.m., one of the ship's helicopters took off from the Cape St. George to provide surveillance during the mission. The helicopter was loaded with half a dozen Hellfire missiles when it took off.

The USS Sterett took the lead, staying about 2,000 yards in front of the aircraft carrier USS Lincoln.  Tasked with protecting the carrier, the USS Cape St. George stayed about 2,000 yards behind the Lincoln, ready to react to any threats.

The first several hours were uneventful. The three ships passed several commercial cargo ships along the way. All the while U.S. helicopters flew ahead, warning the ships of any threats.

Just as the ships closed in on the most difficult part of the transit – the so-called knuckle – a U.S. Predator spotted an Iranian F-27.  Just minutes later, the Iranian surveillance plane flew along the starboard side of the ship. While this is fairly routine, as soon as the surveillance plane came in to sight, sailors all across the bridge grabbed binoculars and ran outside to catch a glimpse.

The F-27 flew right by the ships without any incident.

After the plane disappeared, an Iranian patrol boat appeared as just speck on the horizon.

A sailor on the bridge of the Cape St. George estimated the boat was at least five miles away. "It's heading right for the Abe," another sailor said, referring to the USS Abraham Lincoln.

Suddenly the bridge was buzzing with energy again. Some sailors held binoculars and studied the ship, while others picked up phones and radios.  U.S. helicopters headed toward the boat and radioed information about the craft. Suddenly, when the boat was just about two miles away from the U.S. ships, it changed course and headed away from the carrier.

Despite the fact the potential threat seemed to be over, the bridge continued to buzz and binoculars remained pointed in that direction for several minutes after the boat disappeared.

Aside from the occasional direction to change speed or check how far the Cape St. George was behind the Abe, the bridge quieted a bit. Minutes passed without incident.  A minute turned into an hour. The crew ate fruit and pop tarts Pop Tarts and drank coffee.

Then the radio crackled, a phone rang, and someone said that six or seven fast boats were heading right for the Abe.

The tiny boats were tough to see as they went speeding along the horizon, disappearing every few seconds when they found the bottom of a wave. In fact, the easiest way to keep track of the boats was to look for the U.S. helicopters overhead.

Several of the boats sped right in front of the Sterett.  One sailor said they cut less than 2,000 yards in front of the destroyer.  After they made it to the other side of the U.S. convoy, one of the boats, lagging behind, tried to cut in between the Sterett and the Abe.

That was a little too close for comfort, so a helicopter fired off a flare in the direction of the boat, causing it to turn off and away from the carrier.

The bridge was alive with excitement.  Were they Iranian boats?  Were they Revolutionary Guard?  Several minutes passed before the captain said they were likely smugglers and did not appear to be armed. But just about every sailor on the bridge was smiling at the excitement.

The transit was nearing the end and the crew seemed to take a collective deep breath.  About one hour later the ship’s Capt. Don Gabrielson, addressed the ship over the PA system, congratulating them for a job well done.

The sailors returned to their normal duties and began to prepare for their next mission, conducting flight operations over Afghanistan. They were scheduled to begin flights the very next day.

Despite the fact the transit was safe and somewhat uneventful, the sailors seemed pleased.

“I got to see fireworks!” one sailor said, referring to the flares and smiling wide.

Updated at 12:30 p.m. ET: Hours after the European Union imposes an oil embargo and sanctions on Iran's central bank, France, Britain and Germany say they are willing to negotiate with Iran if it is ready to talk seriously about its nuclear program.

"We call on Iran's leadership immediately to suspend its sensitive nuclear activities and abide fully by its international obligations," the European countries say in a joint statement. "Until Iran comes to the table, we will be united behind strong measures to undermine the regime's ability to fund its nuclear program."

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In response, the offices of Treasury secretary Timothy Geithner and Secretary of State Hillary Clinton issues the following statement, according to NBC News:

 

"We welcome today's decision by the European Union to ban imports of Iranian crude oil and petroleum products, freeze the assets of the Iranian central bank, and take additional action against Iran's energy, financial, and transport sectors."

Updated at 12 p.m. ET: Iran says a European Union decision Monday to impose new sanctions over its nuclear program is "psychological warfare," Reuters reports.

"... Imposing economic sanctions is illogical and unfair but will not stop our nation from obtaining its rights," Foreign Ministry spokesman Ramin Mehmanparast is quoted as saying by state television, referring to Iran's nuclear energy ambitions.

Updated at 11 a.m. ET: Russia's Foreign Ministry says the European Union was wrong to impose an oil embargo on Iran over its controversial nuclear program, The Associated Press reports.

"It's apparent that in this case there is open pressure and diktat, aimed at 'punishing' Iran for uncooperative behavior. This is a deeply mistaken policy, as we have told our European partners more than once. Under pressure of this sort, Iran will not make any concessions or any corrections to its policies," the ministry says.

Updated at 9:45 a.m. ET: Israeli Prime Minister Benjamin Netanyahu praised a European Union decision to place sanctions on Iranian oil exports, Reuters reports. "I think this is a step in the right direction," Netanyahu said at a meeting of his Likud faction in parliament. "For now, it is impossible to know what the result of these sanctions will be. Heavy and swift pressure is needed on Iran and the sanctions must be evaluated according to their results."

Netanyahu also said that despite world pressure so far "Iran is continuing undeterred to develop nuclear weapons," Reuters adds.

• USS Lincoln sails through Strait of Hormuz

Updated at 8:30 a.m. ET: A member of Iran's influential Assembly of Experts, former intelligence minister Ali Fallahian, says Tehran should respond to an EU decision to impose sanctions on Iran -- some of which come into force in July -- by stopping oil sales to the bloc immediately. This would deny the Europeans time to arrange alternative supplies and damaging their economies with higher oil prices.

"The best way is to stop exporting oil ourselves before the end of this six months and before the implementation of the plan," the semi-official Fars news agency quoted him as saying, Reuters reports. He also reiterated that Iran could close the Strait of Hormuz, through which a third of all oil tanker traffic passes to importers around the world.

Published at 7:45 a.m. ET: The European Union on Monday adopted an oil embargo against Iran over its nuclear program, a day after U.S., British and French warships sailed into the Persian Gulf.

British Foreign Secretary William Hague on Monday called the measure part of "an unprecedented set of sanctions." 

"I think this shows the resolve of the European Union on this issue," he said.

Diplomats say the measures, adopted by the EU's 27 foreign ministers, include an immediate embargo on new contracts for crude oil and petroleum products while existing ones are allowed to run until July.

Tehran denies claims that its nuclear program is aimed at developing weapons, saying it is for peaceful purposes.

In a report that examined how Iran might respond to an EU oil embargo, Professor Paul Stevens, a visiting professor at University College London (Australia) and research fellow at U.K. think tank Chatham House, said it was "extremely unlikely" that Iran would not retaliate.

'Lockerbie-type response' feared
Stevens said that if Iran seriously threatened the transit of oil tankers through the Strait of Hormuz, a vital route for world supplies, this would "rapidly degenerate into a shooting war" between Iran and the U.S., supported by its allies.

He expressed doubts Iran would try to do this, saying it was a "very powerful card that Iran is unlikely to play early in the game."

However, Stevens said Iran had other retaliation options, warning that there "could even be a Lockerbie-type response prompted by elements from within Iran," referring to the bombing ofPan Am flight 103 over Lockerbie, Scotland, which led to 270 deaths. That attack was blamed on Moammar Gadhafi's Libyan regime.

He also said Iran could try to push oil prices upward by creating further instability in Iraq, hitting that country's oil exports; make "serious trouble" for NATO in Afghanistan; and also put "huge pressure" on other Gulf oil exporters and "at worst" threaten oil facilities."

• Slices of life in Iran

Stevens said the Abqaiq processing facility in Saudi Arabia was "well within Iranian missile range."

On Sunday, the aircraft carrier USS Abraham Lincoln and its battle group sailed through the Strait of Hormuz, despite previous threats from Iran to attack the aircraft carrier Stennis if it returned to the Gulf.

U.S. military officials said the Lincoln saw no sign of Iranian speed boats that sometimes harass U.S. warships.

The U.K.'s Telegraph newspaper reported that the nuclear-powered Lincoln was accompanied by a British navy ship and a French warship.

A U.K. defense ministry spokesman told the paper that HMS Argyll had joined the U.S. carrier group "to underline the unwavering international commitment to maintaining rights of passage (to the Strait of Hormuz) under international law."

The Associated Press, Reuters and msnbc.com staff contributed to this report.

By Jim Miklaszewski, NBC News

US Navy officials report the aircraft carrier Abraham Lincoln and its battle group steamed through the Strait of Hormuz into the Persian Gulf Sunday without incident. It's the first US carrier to pass through the Strait since the Iranians threatened to attack the aircraft carrier Stennis three weeks ago, if it attempted to return to the Persian Gulf. Pentagon and US military officials have made it clear that Iranian threats would not deter the US Navy from operating in international waters in the Strait and the Gulf.

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US military officials say the Lincoln, with its guided-missile cruiser and two guided-missile destroyers, saw no sign of the Iranian navy speed boats which occasionally harass US warships as they pass through the Strait. Those incidents have increased, and in fact become somewhat routine since Iran's radical Revolutionary Guard has taken control of Iran's naval forces in the Strait and Persian Gulf.

Navy officials say the Lincoln battle group is in the Gulf on routine and regularly-scheduled exercises.

A second battle group led by the aircraft carrier USS Carl Vinson is in the Northern Arabian Sea conducting flight missions over Afghanistan.

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Updated 3:30 p.m. ET: White House spokesman Jay Carney would not confirm the letter or overtures for direct talks with Iran when asked in a news briefing on Wednesday, NBC News reported.

"We don't discuss specific communications -- diplomatic communications. I would say that we have a variety of channels through which we can communicate with the Iranians. And that any message we communicate to the Iranians about these issues is -- would be entirely consistent with what we've said publicly, what I've said publicly, the president, secretary of state and others."

Original story: An Iranian lawmaker claimed Wednesday that President Barack Obama called for direct talks with Iran in a secret letter to the Islamic Republic's supreme leader that also warned Tehran against closing the strategic Strait of Hormuz.

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Obama administration officials denied to The Associated Press there was such a letter. A report in The New York Times on Jan. 12 quoted unnamed U.S. government officials as saying a similar letter had been sent.

Iran has threatened to close the waterway, the route for about one-sixth of the global oil flow, because of new U.S. sanctions over its nuclear program.

Conservative lawmaker Ali Motahari revealed the content of the purported letter days after the Obama administration said it was warning Iran through public and private channels against any action that threatens the flow of oil from the Persian Gulf.

"In the letter, Obama called for direct talks with Iran," the semiofficial Fars news agency quoted Motahari as saying Wednesday. "The letter also said that closing the Strait of Hormuz is (Washington's) red line."

"The first part of the letter contains threats and the second part contains an offer for dialogue," he added.

Iran's Foreign Ministry spokesman Ramin Mehmanparast confirmed that Tehran received the letter and was considering a possible response.

In Washington, an Obama administration official denied that Obama sent a letter to Ayatollah Ali Khamanei, saying communication of U.S. views were being delivered through other diplomatic messages. The official spoke on condition of anonymity because of the sensitivity of the issue.

U.S. forces are fully prepared to deal with any Iranian threats to close the Strait of Hormuz, Defense Secretary Leon Panetta said on Wednesday.

"We are not (taking) any special steps at this point in order to deal with the situation,'' Panetta told reporters at the Pentagon, Reuters reported. "Why? Because frankly we are fully prepared to deal with that situation now.''

The Associated Press and Reuters contributed to this report.

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TEHRAN - An Iranian pro-reform newspaper says the country's OPEC governor has warned the country's Arab neighbors that Tehran will view any increase in crude production to counterbalance a potential embargo on Iranian oil as an unfriendly act.

A Sunday report by Shargh daily quotes Mohammad Ali Khatibi as saying that Arab nations will be an "accomplice in the consequences," if they raise output to offset any potential loss of Iranian crude exports due to an embargo.

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New U.S. sanctions against Iran approved last month target the country's central bank and, by extension, its ability to sell petroleum abroad. The U.S. has delayed implementing the sanctions for at least six months. The EU is also contemplating an embargo.

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Iran is OPEC's second-largest oil producer after Saudi Arabia with output of about 3.5 million barrels per day. It is facing trade hurdles over its nuclear program, which the United States and its allies say is aimed at building bombs.

Iran says it needs nuclear technology to generate electricity.

• Video: Is there a covert war against Iran?

EU countries have proposed "grace periods" on existing contracts of one to 12 months to allow companies to find alternative suppliers before implementing an embargo.

Iran has threatened to block the vital oil shipping route of the Strait of Hormuz in the Gulf if sanctions imposed on its oil exports.

Reuters and The Associated Press contributed to this report.

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