US will not hesitate to defend Israel, Rice warns Tehran

· Vow comes on second day of ballistic missile tests
· Leaders threaten to shut vital oil route if attacked

The US vowed to defend Israel and its other allies in the Gulf, as Iran carried out its second ballistic missile test in two days yesterday.

As the situation worsened in the Gulf, the French oil company Total said it would pull out of a large-scale investment in an Iranian gas field - a serious blow to Tehran, which is keen to exploit its gas reserves, and a victory for the Bush administration, which has been seeking to isolate the Iranian government.

A spokeswoman for the company said it was too risky to invest in Iran at present.

Oil prices resumed climbing yesterday as Opec said it would not be able to replace any shortfalls if Iran were attacked and took its crude supplies off the market.

The second volley of missiles was launched by the Iranian Revolutionary Guard Corps, a politicised militia parallel to the regular army. The Pentagon, whose surveillance satellites and other technology track such launches, yesterday confirmed the second batch of missile tests, which were carried out at night.

Israel responded to the tests with a show of strength of its own, putting on display at the country's international Ben-Gurion airport its new spy and early warning plane, which can reach Iran. Israel also hinted that it would not hesitate to attack Iran's nuclear facilities.

According to official Iranian reports, the weapons tested included long-range Shahab-3 missiles, capable of reaching Israel and US bases in the region. The reports said the missiles had undisclosed special features. But the Pentagon insisted they were only short-range ones.

The Revolutionary Guard commander, Ali Jafari, referring to the second tests, was quoted as saying: "The manoeuvre brings power to the Islamic republic of Iran and is a lesson for its enemies."

Iran has threatened to shut the Strait of Hormuz, a vital route for Gulf oil exports, if it is attacked. Iran's state media said exercises yesterday involved divers and speedboats, as well as the launch of a high-speed torpedo called Hout. The missile tests and sea operations were an explicit response to Israeli manoeuvres last month, in which war planes were reported to be rehearsing air strikes against Iran's nuclear facilities.

The US secretary of state, Condoleezza Rice, made it clear yesterday that the US would step in if Israel were attacked.

"We take very, very strongly our obligation to help our allies defend themselves and no one should be confused about that," Rice said during a visit to Georgia.

The Israeli defence minister, Ehud Barak, speaking at a Labour party meeting, said the country had not balked before "when its vital security interests" were at stake, an apparent allusion to its 1981 air strike that destroyed Iraq's nuclear plant. But he softened his remarks, noting that "the reactions of enemies ... need to be taken into consideration as well".

If Israel did attack Iran, Tehran could create upheaval in the Middle East, with its ally Hizbullah creating trouble on Israel's northern border and Iranian proteges in Iraq and Afghanistan also going on the offensive against US troops.

The US chairman of the joint chiefs of staff, Admiral Michael Mullen, visited Israel earlier this month for talks with Israeli commanders, and warned publicly on his return to Washington that an Israeli attack would destabilise the region.

Anthony Cordesman, of the Centre for Strategic and International Studies, has said Mullen's remarks were a clear sign that Israel does not have a "green light" from Washington to launch an attack.

The EU foreign policy chief, Javier Solana, is due to visit Tehran this month to discuss incentives offered by the UN security council's permanent members and Germany in exchange for Iran's suspension of uranium enrichment and reprocessing. Iran's response has not been published, but public statements by Iranian officials have been mostly negative.

Iran's oil minister, Gholamhossein Nozari, shrugged off Total's withdrawal, saying the country did not need foreign investment. "We will proceed with development with or without them," he said.