The gloves are off but the U.S. and Iran are just swinging

Tony Karon writes: US President Barack Obama doesn’t want, or intend, to go to war with Iran. But that doesn’t necessarily mean he won’t do so. Neither Mr Obama nor his Iranian counterparts imagine that their game of brinkmanship could lead to a conflagration that neither seeks, but both sides could make political choices that amount to opting for war rather than compromise.

Iran spent last week test-firing surface-to-surface missiles in war games near the Strait of Hormuz, apparently seeking to signal its ability to close off the sea lane through which some 40 per cent of global oil supplies travel. A couple of Iranian officials even threatened to do just that if Iran is blocked from selling its own oil on global markets – although other, more senior officials quickly walked back that threat.

Nevertheless, the US Navy vowed to prevent militarily any closure of the Strait, creating a media firestorm in the news-starved holiday season Western media.

President Obama, of course, was spending his Christmas break in Hawaii, but he took time off from golf and snorkelling to sign into law a dramatic escalation of US sanctions against Iran – and any company from any country doing business with Iran’s central bank. The new measures threaten to exclude any bank or firm that trades with Iran from doing business in the US, which remains the hub of global finance. That legislation could be used to effectively stop Iran selling oil on world markets.

The plummeting of Iran’s currency since Monday suggests that the measures are having an impact, although few analysts expect them to change the stance of Iran’s leadership. On the contrary, Ayatollah Ali Khamenei will hope to rally nationalist sentiment by blaming economic hardships on Western pressure over a nuclear programme that remains popular.

Meanwhile, the Associated Press reports: Iran’s army chief on Tuesday warned an American aircraft carrier not to return to the Persian Gulf in Tehran’s latest tough rhetoric over the strategic waterway, part of a feud with the United States over new sanctions that has sparked a jump in oil prices.

General Ataollah Salehi spoke as a 10-day Iranian naval exercise ended near the Strait of Hormuz at the mouth of the Gulf. Iranian officials have said the drill aimed to show that Iran could close the vital oil passage, as it has threatened to do if the United States enacts strong new sanctions over Iran’s nuclear program.

The strait, leading into the Gulf of Oman and Arabian Sea, is the only possible route for tankers transporting crude from the oil-rich states of the Persian Gulf to markets. A sixth of the world’s oil exports passes through it every day.

Oil prices rose to over $101 a barrel Tuesday amid concerns that rising tensions between western powers and Iran could lead to crude supply disruptions. By early afternoon in Europe, benchmark crude for February delivery was up $2.67 to $101.50 a barrel in electronic trading on the New York Mercantile Exchange.

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