Thursday, December 29, 2011

Putting a Cork in the Persian Gulf

Iran is starting to look a lot like Japan in 1941 after FDR announced the oil embargo of Japan.  Having puruid a policy that antagonizes a lot of people, Iran is looking at facing serious sanctions.  Given the enormous amount of unrest that has already been demonstrated there, the leadership cannot afford economic prob

Using some dated information, the Persian Gulf countries are responsible for producing about 25% of the worlds oil.  Most of that is sent through the Persian Gulf.

David E. Sanger and Annie Lowrey, New York Times, 28 December 2011

WASHINGTON - A senior Iranian official on Tuesday delivered a sharp threat in response to economic sanctions being readied by the United States, saying his country would retaliate against any crackdown by blocking all oil shipments through the Strait of Hormuz, a vital artery for transporting about one-fifth of the world's oil supply.

The declaration by Iran's first vice president, Mohammad-Reza Rahimi, came as President Obama prepares to sign legislation that, if fully implemented, could substantially reduce Iran's oil revenue in a bid to deter it from pursuing a nuclear weapons program.

The American effort, as described by Mr. Cohen and others, is more subtle than simply cutting off Iran's ability to export oil, a step that would immediately send the price of gasoline, heating fuel, and other petroleum products skyward. That would "mean that Iran would, in fact, have more money to fuel its nuclear ambitions, not less," Wendy R. Sherman, the newly installed under secretary of state for political affairs, warned the Senate Foreign Relations Committee earlier this month.

Instead, the administration's aim is to reduce Iran's oil revenue by diminishing the volume of sales and forcing Iran to give its customers a discount on the price of crude.

Adding weight to their threat, Irans top naval commande has seconded the threat and said it would be easy to close the straights.

Second Iranian official says regime could close gulf to oil traffic

LA Times, 28 December 2011

ORTING FROM TEHRAN -- Iran’s top naval commander told Iran's English language Press TV on Wednesday that closing the Persian Gulf to oil tanker traffic would be "easier than drinking a glass of water" but added that Iran would not do so for now.

"Closing the Strait of Hormuz for Iran's armed forces is really easy ... or, as Iranians say, it will be easier than drinking a glass of water," said Habibollah Sayyari. "But right now, we don't need to shut it as we have the Sea of Oman under control, and we can control the transit."...

But an oil expert, who also did not want to identified, said : "It is suicide if Iran seals off the Strait of Hormuz and I think it will never be realized.”

From a temporary point of view the Iranina commander is correct.  Iran has bulked up on land to sea naval missles and advanced naval mines.  Some of these mines are rocket assisted, which allows them to be planted on the outer approaches to the Persian Gulf in deeper waters.  This type of bottom laying mine can take some time to find and destroy.

They also have a variety of diesal and midget submarines that could cause all sorts of mischeif within the Gulf until they were hunted down.

In the past the United States has oporated its carriers within the Gulf, but that would be a fairly risky proposition given the firepower that Iran might have on hand.

The Gulf Region is a net importer of foods.  Finding alternate routes for that cargo will also be expensive.
So while, the action likely would be was the attack on Pearl Harbor.  Much like the Japanese, the Iranians may decide that if they are going to go down, they are not going to go down without a fight.

In any case Iran is clearly worried (from the NYT piece):
One measure of the effects, however, is that the Iranian leadership is clearly concerned. Already the Iranian currency is plummeting in value against the dollar, and there are rumors of bank runs.

"Iran's economic problems seem to be mounting and the whole economy is in a state of suspended expectation," said Abbas Milani, director of Iranian studies at Stanford University. "The regime keeps repeating that they're not going to be impacted by the sanctions. That they have more money than they know what to do with. The lady doth protest too much."


Matt said...

Threatening the oil or oil prices (or the dollar as the unit of trade in oil)is the surest way to start a war quickly.

russell1200 said...

Very true. The only way that comes to mind that is quicker is launching nukes.