Iran enhances its capacity to shut down the global oil supply

The lesson of the famous Millennium 2002 Challenge was that a cumbersome military machine that over-invests in high tech weaponry is vulnerable to swarming attacks. In the $250 million war game such an attack resulted in most of the US fleet being sunk within hours.

With the development of the F-35 Joint Strike Fighter — the most expensive defense program ever — going ahead, it looks like the Pentagon is still stuck in the past. Iran on the other hand — the country that grasps the jugular vein through which most of the world’s oil supply flows (the Strait of Hormuz) — today made clear that it knows exactly how to flex its muscles in that arena and it will do so with vessels designed for lethal swarming.

AFP reports:

Iran began mass-producing two high-speed variants of missile-launching assault boats on Monday, warning its enemies not to “play with fire” as it boosts security along its coastline.

The inauguration of the production lines for the Seraj and Zolfaqar speedboats comes a day after President Mahmoud Ahmadinejad unveiled Iran’s home-built bomber drone, which he said would deliver “death” to Iran’s enemies.

The United States expressed concern about the Islamic republic’s growing military capabilities.

Iran’s state news agency IRNA reported that the Seraj (Lamp) and Zolfaqar (named after Shiite Imam Ali’s sword) boats would be manufactured at the marine industries complex of the defence ministry.

Defence Minister Ahmad Vahidi opened the assembly lines, saying the vessels would help to strengthen Iran’s defences, IRNA said.

“Today, the Islamic Republic of Iran is relying on a great defence industry and the powerful forces of Sepah (Revolutionary Guards) and the army, with their utmost strength, can provide security to the Persian Gulf, the Sea of Oman and Strait of Hormuz,” Vahidi said.

He issued a stern warning to Iran’s foes.

“The enemy must be careful of its adventurous behaviour and not play with fire because the Islamic Republic of Iran’s response would be unpredictable,” IRNA quoted him as saying.

“If enemies attack Iran, the Islamic Republic of Iran’s reaction will not be restricted to one area. The truth of our defence doctrine is that we will not attack any country and that we extend our hand to all legitimate countries.”

Meanwhile, in yet another response to Jeffrey Goldberg’s prediction of an Israeli attack on Iran, the former UN chief weapons inspector, David Kay, suggests that Israel is using the issue in order to press the Obama administration to ease its pressure on settlements and the need to make concessions to the Palestinians.

… Israel is engaged in psychological warfare with the Obama administration — and it only partly concerns Iran.

With regard Iran, Israel clearly understands that any unilateral military action it took against Iran without U.S. knowledge and support could have consequence of strategic importance for Israel and might even make an attack on Iran of limited benefit. Israel would much rather have the U.S. with it in an attack on Iran, or, even better, would be if the U.S. executed the attack entirely on its own.

But beyond Iran, of probably greater importance to the current Israeli government is avoiding the Obama administration pushing it into a choice between settlements and territorial arrangements with the Palestinians that it is unwilling to make and permanent damage to its relationship with the U.S. Hyping the Iranian nuclear program and the need for early military action is a nice bargaining counter. The U.S. certainly cannot join or lead an attack on Iran while pushing the Israeli government to the brink on settlements and concessions to the Palestinians. Or if the U.S. wants to avoid an imminent Israeli strike, it must make concessions to Israel on the Palestinian issues.

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{ 12 comments }

Christopher Hoare August 23, 2010 at 11:44 pm: Kay’s suggestion is really that the only way Israel can gain its objectives is by successful manipulation of its power over the US political process. Similarly, the way Iran chooses to fight Israel is through exploiting the weaknesses of that power.
The US dare not lose control over the free passage of oil through the Strait of Hormuz — it would be catastrophic for it’s own needs and a fatal mistake for any future understanding about power sharing with China.
scott August 24, 2010 at 5:55 am: The only oil we get from there goes to our military. It might affect prices, Europe and Asia, but we get only 10% of our oil from the Middle East.

That, I can’t prove but will bet, is what our military uses. Our oil is produced domestically, or comes from Mexico, Canada, Venezuela, and Nicaragua. Logistically it doesn’t make sense that we’d ship oil that far, pay to pass through the Suez, through the Med and across the Atlantic. Sure some nominal amount may come from there, but that must be the exception.
Paul Woodward August 24, 2010 at 8:01 am: Saudi Arabia is the world’s #1 oil producer and #3 oil supplier to the US. Oil from Saudi Arabia, Iraq and Kuwait provides 19% of US oil imports and it all comes through the Strait of Hormuz. With the ability to shut down or interrupt the flow of oil out of the Gulf, Iran has us, so to speak, over a barrel.
David R. Evans August 24, 2010 at 9:16 pm: Just as important, if not more so, US regional hegemony would suffer if Iran is attacked. US strategists control the behavior of recipients of ME oil, no small factor either. I would suggest that US Congress refrain from doing AIPAC’s bidding, and work in the best interest of the US, rather than Israeli Zionists. It’s time to abandon Mr. Netanyahu, and talk with Mr. Ahmadinejad in ernest.
Joseph Partida August 24, 2010 at 9:31 pm: I hear that if our dollar value goes down again, bombing Iran would get them to close the strait which would raise the price of a barrel 100 times and since oil is locked in to us dollars, all other currencies would plummet and the us dollar would be king. Think about it.
scott August 24, 2010 at 9:57 pm: Paul, I believe you are mistaken about US consumption of Saudi Arabian oil is 4th, though they no doubt have much influence in setting the price. Canada, Mexico and Domestic production exceed the Saudi contribution to domestic supply with Venezuela and Nigeria essentially on par with the Saudi contribution. I don’t know how much of this represents the military share of our consumption. Of course, we provide oil to Israel as well.

I don’t dispute the vital nature of the 13 mile wide Straits of Hormuz and Saudi Arabia being the #1 producer of oil, just the US share. Currently supplies in reserve are at all time highs, tankers are holding vast stores in tankers off shore.
http://www.eia.doe.gov/pub/oil_gas/petroleum/data_publications/company_level_imports/current/import.html

Crude Oil Imports (Top 15 Countries)
(Thousand Barrels per Day)
Country May-10 Apr-10 YTD 2010 May-09 YTD 2009
CANADA 1,997 1,883 1,937 1,746 1,860
MEXICO 1,290 1,134 1,110 1,088 1,174
SAUDI ARAB 1,093 1,245 1,068 996 1,079
VENEZUELA 1,011 851 918 1,228 1,025
NIGERIA 1,004 1,092 986 552 608
ANGOLA 423 508 401 493 555
IRAQ 394 490 480 254 487
RUSSIA 358 288 250 416 266
ALGERIA 352 292 306 126 249
BRAZIL 312 289 274 380 349
COLOMBIA 295 364 306 227 250
KUWAIT 219 278 201 93 170
ECUADOR 160 179 177 187 229

Our current surpluses of a million barrels/wk would make Saudi Oil less than vital for US, but again, Europe and Asia would be harmed substantially and cost would increase. When total petroleum is considered, Venuzuela passes the Saudi contribution, see the second chart (in link)
2004 2005 2006 2007 2008 2009
U.S. 1,983,302 1,890,106 1,862,259 1,848,450 1,811,817 1,956,596
http://www.eia.doe.gov/dnav/pet/pet_crd_crpdn_adc_mbbl_a.htm
scott August 24, 2010 at 9:59 pm: the formatting was destroyed in posting. I added spaces between each category/column hope it still works for you.
Norman August 24, 2010 at 11:14 pm: Gee, and here I thought that the P.O.T.U.S. called the shots as to whether or not the U.S. Military went to War. So it’s the Israeli’s is it? Time that they – the Israelis came up for air, started being grown up adult members of the World Society, quite being a bully towards others.
scott August 25, 2010 at 7:17 am: Joseph, if we bombed Iran the dollar might lose it’s reserve currency role. If the dollar were to so strengthen the US might then lose more exports, further expanding trade deficits, sinking us further in debt. Attacking Iran will destroy this country sooner or (not too much) later
Paul Woodward August 25, 2010 at 8:59 am: Unless I don’t understand the way the market works, the flow of the physical commodity (whether the oil is coming from Venezuela or Saudi Arabia) is less significant than supply and demand. An interruption in Gulf supplies would push up oil prices globally at a time when no one can afford that kind of economic strain.
scott August 25, 2010 at 9:34 am: You’re right and I believe I stated as much. We could further cut our imports of oil by abandoning or ethanol program. We’d be foolish to get behind the drill baby drill. Those bumber stickers that state “drill here, drill now, pay less” are wrong. Domestic reserves are not as cost effective as foreign oil. Our wells are old and declining, and our environmental laws and legal recourse add to the cost of domestic production. Nigeria “enjoys” a BP oil spill every year, and the oil companies don’t get sued as they do here.
scott August 25, 2010 at 10:05 pm: I thought it relevant to add that if we did bomb Iran, and you agree with me that might cause the thread holding the sword of Damacles that looms over our economy to fray, the long term effect might well be to lower oil prices. You know, after our role as reserve currency is gone. Default or printing money will both lead to the same result, we won’t be able to borrow money to fund our deficits. Having to balance our budget post haste will shrink our economy substantially reducing our/global oil demand. By the time this happens, Iran will have stabilized the Straits of Hormuz, (as we will have gone home)