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Iranian threats to halt oil ships prompt U.S. to send in Navy
Question of the Day
Iran crying ‘wolf’
“Obviously the sanctions have started to bite,” said Samuel Ciszuk, a consultant at KBC Energy Economics in Britain. “Economically, the regime is going to be under pressure in the coming months, and that seems to be a driving force” in attempts to push up oil prices with threats over the strait.
Markets, however, are not as jittery as they were in early January after Iranian commanders warned of closing the strait and announced naval war games.
Concerns about a slowing Chinese economy and weakening demand for oil in North America and Europe are now higher priorities on traders’ minds, said Mr. Ciszuk.
“The Iranians have sort of captured the imagination of the markets with their threats. But there is a certain element of crying wolf, too. … Will Iran actually do it?” he asked.
The prevailing mood suggests probably not, but Iran also has no hesitation to remind the world that it is possible. In Iran’s calculation, the threats could discourage talk of military strikes by Israel and others and scare off even more punishing sanctions on its oil industry, which accounts for about 80 percent of the country’s foreign revenue.
Gen. Hasan Firouzabadi, chairman of Iran’s Joint Chiefs of Staff, has claimed that Iran has the capability to close the strait “from a military point of view,” but the final decision rests with Supreme Leader Ayatollah Ali Khamenei.
At the same time, about 150 Iranian lawmakers in the 290-seat parliament have signed a proposal urging the closure of the strait in response to sanctions. It is unclear whether the parliament could force such a military blockade, but it reflects the growing frustration among some officials over Iran’s isolated economy.
One lawmaker, Javad Karimi Qodoosi, also raised the possibility of charging tariffs of 3 percent of the value of each barrel of oil from ships transiting the Strait and “transfer [the money] to Iran’s treasury.”
Turning the strait into a toll way, akin to the Suez or Panama canals, would likely bring an angry backlash from Gulf Arab oil producers and retaliatory economic measures from Iran’s foes.
U.S. Defense Department press secretary George Little has described the upcoming naval exercises as not specifically a “message to Iran.” However, recent moves suggest otherwise, as the Pentagon added a floating assault base, the retrofitted USS Ponce, to the Gulf flotilla and sped up the deployment of the aircraft carrier USS John C. Stennis to ensure two carriers are in the Gulf region at all times.
“This is a defensive exercise aimed at preserving freedom of navigation in the international waterways of the Middle East and aimed at promoting regional stability,” Mr. Little told Pentagon reporters.
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