A month after “Supreme Guide” Ali Khamenei warned that his Islamic Republic was ready for war, Iran has provided a glimpse of how it envisions a clash with America in the form of a 10-day aero-naval exercise — including long-range missile tests yesterday — aimed at closing the strategic Strait of Hormuz, which connects the Persian Gulf to the Gulf of Oman and the Indian Ocean.
Tehran, hoping to use oil as a weapon, has declared that any attempt at banning its petroleum exports would lead to a closure of the strait.
“If we cannot export oil, not a drop will be allowed to be exported by anyone else,” says Muhammad Reza Rahimi, Iran’s first assistant president.
So sanctions on oil exports — which America and allies are promoting as the centerpiece of enhanced sanctions against the mullahs — would be a casus belli for Tehran.
For Iran, stopping oil exports is a red line, because 55 percent of the government’s income and 80 percent of the country’s foreign earnings come from oil.
Mahmoud Bahmani, the governor of the Central Bank of Iran, says Tehran has currency reserves for up to six months and could ensure essential imports for up to two years. Nevertheless, he describes the planned sanctions as “a declaration of war.”
Iran’s national currency, the rial, is already in free fall, having lost almost half of its value in a month.
Unable to seek a diplomatic way out of the crisis, the mullahs appear to have opted for the Samson option, threatening to inflict as much damage as possible.
“We will stop the flow of oil, crippling the global economy,” writes the Iranian daily Kayhan. “When the price of oil hits $200 or £400 a barrel, we shall see who are the losers.”
Two questions remain: Could Iran close the Strait of Hormuz? And if it could, would that push oil prices through the roof?
The maneuvers show that the answer to the first question is, at best, a maybe.
The strait is a 34-mile-long choke point separating mainland Iran from the tip of Mussandam Peninsula, which belongs to Oman. It’s dotted with islands, the largest of which is Iran’s Qeshm Island, which cuts the strait in two.
The northern half, known as the Clarence Strait, belongs to Iran and is hardly ever used by foreign oil tankers. Iran shares the southern part, the main route for tankers, with Oman. Iran also owns the islands of Larak, Abu-Musa, Sirri, Farur, Hormuz and Hangam at the entrances of the strait. Oman owns the island of Beit al-Ghanam at the southern entrance.
Iran could close the Clarence Strait by declaring it “an internal body of water.”
Closing the channel south of Qeshm would be a different matter. Iran would have to invade and occupy Beit al-Ghanam and Ras Mussandam, thus declaring war on Oman — which would amount to war with all six Gulf Cooperation Council members. Moreover, the southern part of the strait is recognized as international waters, with the right of “innocent passage” guaranteed for all. Closing it would be an act of war against the United Nations.
Aware of this, Iran has concentrated the recent maneuvers on the Clarence Strait, making it hard to decide whether it could close Hormuz for more than a few hours.
The second answer isn’t encouraging for Iran, either. Normally, some 16 million barrels of oil pass through the strait daily.
However, by March, Arab exporters will be using pipelines connecting them with the Arabian Sea through the emirate of Fujairah, bypassing Hormuz. Because the strait is the only route for its oil exports, Iran could end up the principal loser.
Tehran’s hopes of provoking global shortages may be exaggerated. World oil stockpiles, now at the highest ever, could be released to prevent sharp price rises. Also, Russia, Norway and Angola have plans for more production in 2012.
As always, the key player is Saudi Arabia, which has little love for the Iranian mullahs. Riyadh has plans to release
an extra 1.5 million barrels a day, two-thirds of Iranian exports, into global markets. The remainder could come from Kuwait, the United Arab Emirates and Iraq.
Since Europe and America no longer depend on Persian Gulf oil, any shortfall wouldn’t affect the American “Great Satan” and its closest allies. So the mullahs’ saber-rattling is a bluff, one that could prove costly for Iran.