Iran and the U.S. trade threats

The Associated Press reports: Oil prices fell on Wednesday, after Saudi Arabia said it will offset any loss of oil from a threatened Iranian blockade of a crucial tanker route in the Middle East.

The U.S. Navy warned that any disruption of traffic through the vital Strait of Hormuz “will not be tolerated.”

In New York, benchmark crude fell $1.98, or about 2 percent, to finish at $99.36 a barrel.

Brent crude fell $1.71 to end at $107.56 a barrel in London.

On Tuesday Iran’s vice president said that his country was ready to close the Strait of Hormuz — a vital waterway through which a third of the world’s tanker traffic flows — if western nations embargo the country’s oil because of Iran’s ongoing nuclear program. The head of the country’s navy added on Wednesday that his fleet can block the strait if need be. His comments came as Iran held a 10-day drill in international waters near the strategic route, which is 21 miles wide at its narrowest point.

A Saudi oil ministry official told The Associated Press that Saudi Arabia and other Gulf producers are ready to provide more oil if Iran tries to block the strait. The official spoke on condition of anonymity because he was not authorized to discuss the issue. He didn’t specify other routes that could be used to transport oil, although they would likely be longer and more expensive for getting crude to the region’s customers.

“Anyone who threatens to disrupt freedom of navigation in an international strait is clearly outside the community of nations; any disruption will not be tolerated,” said Lt. Rebecca Rebarich, a spokeswoman for the U.S. Navy’s Fifth Fleet, which is responsible for naval operations in the Persian Gulf, the Red Sea and the Arabian Sea.

Steve LeVine writes: Is Iran’s threat to close the Strait of Hormuz — the seaway chokepoint for some 17 percent of the world’s daily oil supply — as empty as its vow to wipe Israel off the face of the Earth? Oil traders by and large think so — a day after Iranian Vice President Mohammad Reza Rahimi issued the threat, global oil prices were sharply lower.

Traders say the main reason for their non-chalance is the extent of U.S. military forces deployed in the area. The idea is that, if Iran mines the waterway — which links the Persian Gulf with the Indian Ocean — or harasses oil tankers with its fast patrol boats (such as the one pictured above), the U.S. Navy will swiftly come to the rescue.

At the Financial Times, Najmeh Bozorgmehr and Javier Blas say we may be witnessing a reflection of Iranian politics ahead of March parliamentary elections.

Yet the characters in this latest Persian Gulf drama are among the most unpredictable on the big geopolitical chessboard. While Iran may very well be simply huffing and puffing, it is not out of the question that it would, as it has before, make trouble for oil traffic in the Strait. If it does, that would be serious stuff because of those who are dispatching the 13 oil and liquefied natural gas supertankers that ply Hormuz every day — in addition to Iran, they are Iraq, Kuwait, Qatar, Saudi Arabia and the United Arab Emirates.

In his daily note to clients today, Connecticut-based oil analyst Peter Beutel steps away from the machismo of other traders, and notes the stakes should Iran make good on its threat: “Under any scenario, [it] would be a game-changer. It could keep millions of barrels a day from moving out of the Petroleum Gulf — perhaps as much as 19 million barrels per day — and would instantly draw all consuming nations into opposition with Tehran. The U.S. and its Arab allies would be compelled to open [the strait] by military force.”

I remarked last week on the poor record of sanctions in terms of achieving foreign policy objectives. But it is hung up because, notwithstanding the lobby that earns a living by urging war with this or that country, there is very little upside, and much in the way of downside, in any military solution. So if you wish to forestall a nuclear-armed Iran, and war is too risky, sanctions are about all there is.

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5 thoughts on “Iran and the U.S. trade threats

  1. Leslie Garrett

    I read a couple of years ago about US military war games in that whole region, and I found the story in enough places to make it credible. This happened around 2003, as I recall. These were war games involving troops and planes, but most of the action was done with large computer systems. Apparently they had to stop after only two days, and reset things for a later restart, because in the first day of the war the simulated-Iranians sank two carrier task forces in the gulf with missiles from Russian and China. I am not involved nor do I keep up with military developments, but even in my sparse reading it seems obvious that carriers are dinosaurs, and the US military may well be too muscle-bound to fight well when it comes to anything beyond murdering tribesmen with antique weapons. Does it not seem like Iran is daring them to start something? An embarrassing loss like a carrier might well turn the US military against the Zionists who pushed for the fight and bring on a cascade of changes.

  2. Paul Woodward

    I think the war game you are referring to was the $250 million Millennium Challenge 02. The opposing forces, or Red Team, was led by Gen Paul Van Riper. Army Times reported in August, 2002:

    Retired Ambassador Robert Oakley, who participated in the experiment as Red civilian leader, said Van Riper was outthinking the Blue Force from the first day of the exercise.

    Van Riper used motorcycle messengers to transmit orders, negating Blue’s high-tech eavesdropping capabilities, Oakley said. Then, when the Blue fleet sailed into the Persian Gulf early in the experiment, Van Riper’s forces surrounded the ships with small boats and planes sailing and flying in apparently innocuous circles.

    When the Blue commander issued an ultimatum to Red to surrender or face destruction, Van Riper took the initiative, issuing attack orders via the morning call to prayer broadcast from the minarets of his country’s mosques. His force’s small boats and aircraft sped into action

    “By that time there wasn’t enough time left to intercept them,” Oakley said. As a result of Van Riper’s cunning, much of the Blue navy ended up at the bottom of the ocean. The Joint Forces Command officials had to stop the exercise and “refloat” the fleet in order to continue, Oakley said.

  3. blowback

    It’s not going to be mines or mass attacks by small patrol boats that will be the problem but land-based anti-ship missiles. To stop these, will require the US and its allies to occupy Iranian territory around the Straits at which point they become extremely vulnerable to IEDs, etc.

    Since China and India can take all the oil Iran produces, a Western embargo is irrelevant. I suspect that somewhere in the translation a Western oil blockade (an obvious act of war by the West) was downgraded by the media to a Western oil embargo (which would be meaningless and only harm Western economies).

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