Tehran said it will test-fire missiles in the Strait of Hormuz today (December 31), a move likely to stoke tensions with Washington already running high over Iran's threats to close the strategic oil waterway if sanctions are enforced.

"Shorter- and longer-range, ground-to-sea, surface-to-surface and surface-to-air missiles will be tested on Saturday," the Isna news agency quoted Iran's navy spokesman, Commodore Mahmoud Mousavi, as saying yesterday.

Iran, which has been carrying out war games in the Strait of Hormuz over the past week, has said that "not a drop of oil" would pass through the strait if Western governments follow through with planned additional sanctions over its nuclear programme, said a report in our sister publication, the Gulf Daily News.

The US State Department said on Thursday that Iran's threat to close the waterway, through which more than a third of the world's tanker-borne oil passes, exhibited "irrational behaviour" and "will not be tolerated."

The naval manoeuvres launched by Iran in the strait on December 24 have so far included mine-laying and the use of aerial drones, according to Iranian media.

Analysts and oil market traders have been watching developments in and around the Strait of Hormuz carefully, fearing that the intensifying war of words between arch foes Tehran and Washington could spark open confrontation.

With tensions over the strait simmering, Iran's rival Saudi Arabi announced that it had signed a deal to buy 84 new US fighter jets in order to boost defence capabilities.

On Thursday, the US said the $30 billion deal sent a "strong message" to the Gulf region, where Riyadh has voiced concerns about Tehran's efforts to boost its influence.

In addition to buying the new aircraft, Saudi Arabia will be able to modernise 70 existing ones while also procuring munitions, spare parts, training and maintenance contracts, US officials said.

Two US warships had entered a zone where Iran was conducting its war games, but a US naval spokeswoman said the ships were travelling as part of a pre-planned, routine operation and were not deployed as a show of strength.

"Our interaction with the regular Iranian Navy continues to be within the standards of maritime practice, well-known, routine and professional," Fifth Fleet spokeswoman Lieutenant Rebecca Rebarich said.