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Strait of Hormuz

Are we slipping towards war with Iran? We may very well be, then again we might not. Iran is threatening to close the Strait of Hormuz, if there are further sanctions placed on the buy of Iranian oil. This could reduce the supply of oil world wide by as much as 20%.

It is a fairly complex situation. The Iranian government claims that their very large uranium enrichment program is just for civilian nuclear power. The problem is that you don’t need to enrich uranium to fuel nuclear reactors, but you do need to if you want nuclear weapons.

Pretty much everyone in the world has agreed that Iran is pursuing a nuclear weapon and they will probably achieve it sooner or later. The physics is hard, and the engineering is exacting, but the basic concepts are all well known and with enough time, effort and money, just about any nation that has native uranium resources (as Iran does) could build one or more.

Given this state of affairs various nations have been pushing for extending sanctions on the Islamic Republic, including their biggest trading partner for oil the European Union. The EU announced today that it had agreed in principal on an embargo of Iranian oil. It will take about a month for them to hash out all the particulars but to stop buying oil from Iran would be a major blow to the Iranian economy.

Iran has made threats to close the 34 mile wide strait before; back in 2008 they said that if there were any attack on Iranian soil from the United States or Israel they would close the strait. That would mean that the 14 or so daily super-tankers, carrying 35% of the world’s sea-born oil shipments would be cut off. That could make the price of oil increase by as much as 50% in mere days.

Obviously this is not a situation that the rest of the world would be willing to put up with. It is one of the reasons that the US Fifth Fleet is based in the Persian Gulf, to assure that the choke point is kept open, regardless of what the government in Tehran wants.

Unfortunately it is likely that Iran would be able to close the strait for at least some time, even with the US military assets that are stationed there. The bend that the strait executes combined with its narrowness and the slow speed that super-tanker make when loaded all combine to make it a good place for those wanting to prevent shipping.

The waterway is so narrow that there are regular collisions between ships, both commercial and military, and that is without the threat of small fast boats, air craft or missile emplacements to worry about. If Iran is really determined to close the strait, then they can make a good job of it.

The question is, are they really ready to try to throw down with the West over this? There is some indication that this posturing might be a bit of a bluff.

If the EU bans Iranian oil that does not mean they would not be able to sell oil, merely that they would not have their biggest current market available to them. It would hurt in the short term, but if they were able to come to terms with say China and develop delivery routes then that could replace their old markets.

Then there is the fact that any disruption or possible disruption in the amount of oil available raises the price. Just in the two weeks that this situation has been heating up crude oil has increased $6 a barrel. Iran is currently exporting about 2 million barrels a day, so that an extra $12 million they are pocketing on the worries all this tough talk is causing.

There is hope that Libya’s oil fields will come back to full production soon, and that will offset some loss of oil in the market if the EU does indeed stop buying from Iran. The Saudi’s have also said they would increase production and exportation of oil in support of the EU ban, but it is unclear if they really have the capacity to make up for a huge market shunning the oil from the forth largest exporter in the world.

If the Iranian government sees that it is going to have to develop new markets and trading partners to keep selling oil, it is in its interest to pocket as much money as it can in the short term, to offset the cost of developing new markets outside Europe.

The problem is that brinksmanship like this can easily spiral out of control. While the American public is generally tired of wars in the Middle East there is 50% of the population that would support a war with Iran if they acted to close the strait.

It is pretty much a foregone conclusion that the US can control the air space over Iran if we put our military might to it. We’ve done it time and again in the Middle East and our air power is geared to wiping out opposing forces air force and ground missiles. But is that enough to end a fight with Iran about the Strait of Hormuz?

If it comes to putting boots on the ground we really are not prepared to fight a large nation like Iran that has had plenty of money to buy good weapons systems over the last few decades. While they can’t buy from NATO countries the Russians and Chinese have been more than happy to sell them weapons systems and expertise. This will not be like fighting Saddam Hussein’s degraded military after a decade of very tough sanctions.

It looks to me that the Obama Administration would rather not have this fight. They know we are stretched thin militarily after our decade of military adventurism, but they might not have a choice if the Iranian government miscalculates and actually follows through on closing the water way that 20% of the worlds oil flows through.

The real question, and it is has been the question in Iran for a long time, is just how much of their rhetoric is serious and how much is just posturing so they don’t look weak to their own domestic population?

Just because the government has managed to suppress the dissent from the last elections, does not mean it has gone away. Nothing brings a nation together more than an external threat, and especially one where they can paint themselves as the scrappy underdog.

Tehran is in a box. If they back away from the fight about their nuclear program they will look weak internally and lose the support of those who want a strong Iran, even if they have to suffer a pretty corrupt and authoritarian government to have it.

On the other hand if they keep taking a hard line with a threat to the worlds oil supply and then act on that threat they have opened themselves up for a coalition like the one that ended the Khadafy regime in Libya.

All in all it is a nervous making time. Here is a fervent hope that calmer heads prevail before we let slip the Dogs of War once again in the Middle East.

The floor is yours.    

UPDATE: I just had an interesting conversation where I got the opinion of a very experienced Middle East Intel Analyst who'd rather remain anonymous.

He is of the opinion that this is all for internal consumption, and that there is zero chance of the government in Tehran actually following through on the threat to close the Strait.

The reasons (some of which have been said in comments) are that they know they can't win. They are doing this to make themselves look like heroes to a restive population by fighting the good fight against the Great Satan.

This person also thinks that part of what they hope to get out of this is to provoke American politicians (think Rick Perry or Mitt Romney) into shooting their mouths off and provide them with the evidence that they are the only can protect the Iranian people.

All in all it makes me a little less concerned that this will spiral out of control.

I know this is anonymous but take it for what it is worth.

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