Iran Will Block “World’s Most Important Oil Chokepoint” If Sanctions Are Imposed

Iran will form a blockade to stop the supply of oil through the strategically important Strait of Hormuz if the West decides to impose economic sanctions on the country, warned the Iranian Vice-President on Tuesday.

“If they (the West) impose sanctions on Iran’s oil exports, then even one drop of oil cannot flow from the Strait of Hormuz,” said Iran’s Vice President Mohammad Reza Rahimi to the Iranian news agency IRNA, as cited by Reuters.

Iran will form a blockade to stop the supply of oil through the strategically important Strait of Hormuz if the West decides to impose economic sanctions on the country, warned the Iranian Vice-President on Tuesday.

“If they (the West) impose sanctions on Iran’s oil exports, then even one drop of oil cannot flow from the Strait of Hormuz,” said Iran’s Vice President Mohammad Reza Rahimi to the Iranian news agency IRNA, as cited by Reuters.

[quote] “Our enemies will give up on their plots against Iran only if we give them a firm and strong lesson,” added Rahimi. “”We take no interest in animosity and hostility, our belief is friendship and brotherhood, but the West will not end its scheming.”[/quote]

According to the US Department of Energy, the Strait of Hormuz is “the world’s most important oil chokepoint”. On average, at least 13-15 oil supertankers cross the strait every day, carrying almost 33 percent of the world’s global seaborne oil supply from numerous Middle Eastern economies including Saudi Arabia, Iraq, Kuwait, Qatar and Iran.

Iranian officials have threatened to shut down the oil traffic through the strait in the past, though the comments made by the Vice-President have been the strongest thus far.

Last week, Iran’s navy started a 10-day exercise east of the passage, involving the use of submarines, ground-to-sea missile systems and torpedoes. The US Navy also conduct regular patrols of the waterways in order to prevent any sudden disruptions to the oil traffic.

As such, most analysts believe that Iran were unlikely to carry out its threat.

“To me, if Iran did that it would be a suicidal act by the regime. Even its friends would be its enemies,” said Phil Flynn, an analyst at PFG Best Research in Chicago, to the National Post.

The US State Department also said that it saw “an element of bluster” in Iran’s threat, dismissing the threat as a mere distraction.

[quote]”It’s another attempt to distract attention away from the real issue, which is their continued non-compliance with their international nuclear obligations,” said the State Department’s spokesman Mark Toner.[/quote]

According to Carl Larry, the president of Oil Outlooks in New York, the US would almost certainly intervene if a blockade does happen.

“First, the US will probably not allow Iran to close the Strait. That’s a major economic thoroughfare and not just for oil. You shut that Strait and we are talking a major hit on many Middle East economies,” said Larry.

“Second, there is no way that the Saudis (alone) have enough oil or quality of oil to replace Iranian crude. Figure Saudi spare capacity is 2 to 4 million at best. Of that spare, about 1-2 million is real oil that is comparable out of Iran. Lose Iran, lose 3.5 million barrels per day of imports. No way.”

Still, the threat did cause oil prices to rise significantly in its aftermath.

Oil prices rose by $1.66, or 1.7 percent, yesterday – the highest it has been in 6 weeks – while electronic trading on the New York Mercantile Exchange also rose by 20 cents to $101.54 a barrel.  at 10:12 a.m. Singapore time. The London-based ICE February Brent, the global benchmark for oil, also rose by $1.21 to $109.17 a barrel in late afternoon trading.