Guest Post: War Imminent In Straits Of Hormuz? $200 A Barrel Oil?

Tyler Durden's picture

Submitted by John C.K. Daly of OilPrice.com

War Imminent In Straits Of Hormuz? $200 A Barrel Oil?

The pieces and policies for potential conflict in the Persian Gulf are seemingly drawing inexorably together.
 
Since 24 December the Iranian Navy has been holding its ten-day Velayat 90 naval exercises, covering an area in the Arabian Sea stretching from east of the Strait of Hormuz entrance to the Persian Gulf to the Gulf of Aden. The day the maneuvers opened Iranian Navy Commander Rear Admiral Habibollah Sayyari told a press conference that the exercises were intended to show "Iran's military prowess and defense capabilities in international waters, convey a message of peace and friendship to regional countries, and test the newest military equipment." The exercise is Iran's first naval training drill since May 2010, when the country held its Velayat 89 naval maneuvers in the same area. Velayat 90 is the largest naval exercise the country has ever held.
 
The participating Iranian forces have been divided into two groups, blue and orange, with the blue group representing Iranian forces and orange the enemy. Velayat 90 is involving the full panoply of Iranian naval force, with destroyers, missile boats, logistical support ships, hovercraft, aircraft, drones and advanced coastal missiles and torpedoes all being deployed. Tactics include mine-laying exercises and preparations for chemical attack. Iranian naval commandos, marines and divers are also participating.
 
The exercises have put Iranian warships in close proximity to vessels of the United States Fifth Fleet, based in Bahrain, which patrols some of the same waters, including the Strait of Hormuz, a 21 mile-wide waterway at its narrowest point. Roughly 40 percent of the world's oil tanker shipments transit the strait daily, carrying 15.5 million barrels of Saudi, Iraqi, Iranian, Kuwaiti, Bahraini, Qatari and United Arab Emirates crude oil, leading the United States Energy Information Administration to label the Strait of Hormuz "the world's most important oil chokepoint."
 
In light of Iran’s recent capture of an advanced CIA RQ-170 Sentinel drone earlier this month, Iranian Navy Rear Admiral Seyed Mahmoud Moussavi noted that the Iranian Velayat 90 forces also conducted electronic warfare tests, using modern Iranian-made electronic jamming equipment to disrupt enemy radar and contact systems. Further tweaking Uncle Sam’s nose, Moussavi added that Iranian Navy drones involved in Velayat 90 conducted successful patrolling and surveillance operations.
 
Thousands of miles to the west, adding oil to the fire, President Obama is preparing to sign legislation that, if fully enforced, could impose harsh penalties on all customers for Iranian oil, with the explicit aim of severely impeding Iran’s ability to sell it.
 
How serious are the Iranians about the proposed sanctions and possible attack over its civilian nuclear program and what can they deploy if push comes to shove? According to the International Institute for Strategic Studies’ The Military Balance 2011, Iran has 23 submarines, 100+ “coastal and combat” patrol craft, 5 mine warfare and anti-mine craft, 13 amphibious landing vessels and 26 “logistics and support” ships. Add to that the fact that Iran has emphasized that it has developed indigenous “asymmetrical warfare” naval doctrines, and it is anything but clear what form Iran’s naval response to sanctions or attack could take. The only certainty is that it is unlikely to resemble anything taught at the U.S. Naval Academy.
 
The proposed Obama administration energy sanctions heighten the risk of confrontation and carry the possibility of immense economic disruption from soaring oil prices, given the unpredictability of the Iranian response. Addressing the possibility of tightened oil sanctions Iran’s first vice president Mohammad-Reza Rahimi on 27 December said, “If they impose sanctions on Iran’s oil exports, then even one drop of oil cannot flow from the Strait of Hormuz.”
 
Iran has earlier warned that if either the U.S. or Israel attack, it will target 32 American bases in the Middle East and close the Strait of Hormuz. On 28 December Iranian Navy commander Rear Admiral Habibollah Sayyari observed, "Closing the Strait of Hormuz for the armed forces of the Islamic Republic of Iran is very easy. It is a capability that has been built from the outset into our naval forces' abilities."
 
But adding an apparent olive branch Sayyari added, "But today we are not in the Hormuz Strait. We are in the Sea of Oman and we do not need to close the Hormuz Strait. Today we are just dealing with the Sea of Oman. Therefore, we can control it from right here and this is one of our prime abilities for such vital straits and our abilities are far, far more than they think."
 
There are dim lights at the end of the seemingly darker and darker tunnel. The proposed sanctions legislation allows Obama to waive sanctions if they cause the price of oil to rise or threaten national security.
 
Furthermore, there is the wild card of Iran’s oil customers, the most prominent of which is China, which would hardly be inclined to go along with increased sanctions.
 
But one thing should be clear in Washington – however odious the U.S. government might find Iran’s mullahcracy, it is most unlikely to cave in to either economic or military intimidation that would threaten the nation’s existence, and if backed up against the wall with no way out, would just as likely go for broke and use every weapon at its disposal to defend itself. Given their evident cyber abilities in hacking the RQ-170 Sentinel drone and their announcement of an indigenous naval doctrine, a “cakewalk” victory with “mission accomplished” declared within a few short weeks seems anything but assured, particularly as it would extend the military arc of crisis from Iraq through Iran to Afghanistan, a potential shambolic military quagmire beyond Washington’s, NATO’s and Tel Aviv’s resources to quell.
 
It is worth remembering that chess was played in Sassanid Iran 1,400 years ago, where it was known as “chatrang.” What is occurring now off the Persian Gulf is a diplomatic and military game of chess, with global implications.
 
Washington’s concept of squeezing a country’s government by interfering with its energy policies has a dolorous history seven decades old.
 
When Japan invaded Vichy French-ruled southern Indo-China in July 1941 the U.S. demanded Japan withdraw. In addition, on 1 August the U.S., Japan’s biggest oil supplier at the time, imposed an oil embargo on the country.
 
Pearl Harbor occurred less than four months later.

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GeneMarchbanks's picture

It's a Strait and this piece was strongly backed by... opinion.

nope-1004's picture

Well, so much for "bringing our troops home and ending these senseless wars".

Obamanation.

 

Poetic injustice's picture

Tsssk.
He is aiming for one more Peace prize and Streets of Hormuz may get it for him.

trav7777's picture

if this is chess, we are up 3 queens and a rook

Ahmeexnal's picture

the MIC should be bombing berlin not iRan.
German elite KSK Kommando Spezialkräfte Harry Burkhart was captured after carrying out surgical bombings in LA:

http://www.dailymail.co.uk/news/article-2081255/LA-arson-fires-Police-pr...

CompassionateFascist's picture

Interesting. A race-realist who's otherwise a moron. US will be attempting to defeat a country of 80 million w 3-6 carrier battle groups, + local land-based airpower and whatever its Israeli master is willing/able to contribute. Not going to work. In military terms, while Iran's conventional forces are not impressive, it's capacity for assymetric warfare is large: 5,000 suicide boats, among much else. If I were ZOG, I would not begin the war w any carriers north of the straits. Won't get 'em back. Meanwhile, the situation in Afghanistan will continue to deteriorate, the Green Zone in Baghdad will be under a Shi'ite seige, a Russian carrier battle group is covering Syria, and Hamas and Hezbollah will both hammer Yizroel. In economic terms, oil at c. $250/barrel will, once China and Japan dump, kill the dollar. Don't know about chess, but if it's a poker game Isramerica is drawing to a desperate, unlikely inside straight against Iran's 3 Aces.

CIABS's picture

whatever is going on over there, i don't think the real essence of it is being reported or opined very widely.  i don't see much evidence of recklessness on the part of the iranian state since 1979, if ever.

what with stuxnet and the like, the public will have a hard time sizing things up.  the oil futures are an indicator, but i don't think they'll be saying much until and unless the may 2011 high is surpassed.

Spirit Of Truth's picture

Iran, Syria, North Korea and even Kosovo are being brought to a boil simultaneously.  Tis all part of the "plan" that got underway when the Soviet Union seemingly collapsed 20 years ago:

http://thespiritoftruth.blogspot.com/2010/03/quick-review-of-history.htm...

BTW, the reason you don't all realize this is because you are just unwitting frogs in the water pot.  Don't you worry, Big Brother has everything under control.

clones2's picture

The US is playing chess.....   Iran still hasn't gotten past checkers...

 

Azwethinkweiz's picture

It's still under consideration that Chess originated in Iran. They're not as dumb as everyone thinks...that's also something to take into consideration.

d_senti's picture

Hey, are you the same guy who thinks he's the reincarnation of Jesus Christ? I left a comment on your blog a while ago telling you to seek professional help.

slewie the pi-rat's picture

he hasn't been trolling here too much, recently, imo

he's not going to change; this is his business

at least he doesn't go on about fractals all the time... 


StychoKiller's picture

"Fractals," a word that's degenerated to annoying buzzword status, kinda like "parydigm shift", or "thinking outside the box."

Hephasteus's picture

Iran Syria and North korea don't have rothchilds banks. And precisely what the fuck does this have to do with Russia you lying jew.

GeneMarchbanks's picture

How-it-will-play-out scenarios are like assholes, we all got them and they all stink. Restore sanity. Start local. All these bastards have a death wish. Start a "convert a lunatic foundation" ASAP.

Divine Wind's picture

I was growing concerned that we would miss your daily Jew / Israel hate speech.

 

Mazel tov !

DaveyJones's picture

running an empire sure is a bitch

Chuck Walla's picture

Bomb their refineries. These Maroons can't refine gas to save their lives, they have to import.  No gas, war grinds to a halt.

11b40's picture

TRAV.  You sound like a Congressman.  Have another shot of hubris, but when you sober up, take a good look at a map.

When gasoline is $10 Gal, if you can find any, you might just wonder who really got rooked.  Checkmate in this game may mean the board gets turned over.

StychoKiller's picture

Speaking of Hubris:

"...Today we are just dealing with the Sea of Oman. Therefore, we can control it from right here and this is one of our prime abilities for such vital straits and our abilities are far, far more than they think."

Not saying that Iran can't cause some serious disruptions in the flow of the spice -- but for how long?

francis_sawyer's picture

if this is chess, we are up 3 queens and a rook

If this were poker... a FLUSH beats a STRAIT

GOSPLAN HERO's picture

Goldman Sachs is Chief of Naval Operations.

eureka's picture

Yep. US needs to think long and hard before starting WWIII to divert attention from its financial rot and general imperial decline and to cause global financial "flight to security" i.e. US bonds - all of which is precisely the US elite's gameplan (rather than the here and elsewhere rumored mere printing ad infinitum).

IF - US elite does launch WWIII - the cost WILL be total US isolation. Nato WILL crumble. Every US embassy around the world WILL be blown up. Nobody likes a bully and the planned false flag ops WILL NOT convince ANYONE.

US citizens must demand a US Renaissance based on a new US manufacturing sector which provides the vast majority if not all US consumer goods AND R&D of new technology - lead by executives who actually like to work and have no interest in just leveraging millions into their pockets every month.

The idea of "nationhood" is that every citizen shares reasonably in sacrifice and reward.

Renaissance or Death, Bitchez. NO MORE EMPIRE.

The one with the biggest gun only wins for a while. In the end symetrical intelligence wins every time.

pkea's picture

The cost will be much higher than just US isolation.  The beginning of the war this year appears to be unavoidable. There is nothing else to distract from the fact of western financial system bankruptcy. I expect for things to get apparent within a few months by spring and full blown by summer. This is how all depressions working themselves out to distract from the naked "kings".  The elites never cared and neither they will, but they will be allright

DaveyJones's picture

another nice post. Unfortunately, this seems to be the standard empire in decline MO

SamAdams1234's picture

Don't for get to thank Miss Lindsay Graham and his BFF, John McCain and his BFF, Senator Liberman.Keep breeding American meat-muppets for the boys to play GI Joes together.

Buck Johnson's picture

This is going to be a nasty war, it truly will be.  Because for one, most of Iran isn't flat desert it's mountainous and rugged so tanks won't be as beneficial.  Two, they are a population of 75 million people and not 25 million splintered by 3 or 5 ethnic groups like Iraq.  They are over 89% shiite.  Three, they have alot of missiles and torpedos of all types that are designed to kill ships.  The last thing is there ballistic missiles or even cruise missiles could target Abqaiq oil facility in Saudi Arabia.  It's the largest oil refinery in the world and it refines 6 million or more barrels of oil a day.  So Iran target this with massive missile attack (there missiles are accurate short ranged) and do enough damage it could literally seize up the oil markets and make 200 dollars a barrel look like a deal.

UP Forester's picture

Don't forget all the former-Soviet chemical and biological scientists going hungry in the 'Stans Iran hired after the fall of the USSR.

Whalley World's picture

Looks more like a strait flush coming, much better than a mere strait

ACP's picture

Steve Liesman is a dick. Unrelated, but I can't stand seeing his ugly mug.

maxmad's picture

I heard he sits when he pees....

ACP's picture

Or pees when he sits.

It also would make the term 'cocksucker' both literal as well as figurative.

OliverTwist's picture

you meant s(h)its when he pees...

Calmyourself's picture

http://www.guardian.co.uk/commentisfree/2010/aug/21/unthinkable-having-a-sit-down

German "men" are shamed into it, sitting when peeing that is, ha no wonder the Greeks keep doing them up the chute...

GMadScientist's picture

In the <armed service>, they taught us to wash our hands.

Oh yeah? Well in the <other armed service>, they taught us not to piss on ourselves.

 

NotApplicable's picture

Women only think sitting is cleaner since they NEVER raise the lid and see what it looks like after one of their massive ass explosions. Not to mention that men clean the bowl with their stream.

When women's restrooms are half as clean as men's, then I'll listen. Until then...

maxmad's picture

$200-pfft!  Wake me up when we reach $400!

Max Hunter's picture

It would be a death nail.. F'n war mongering, racist pigs.  I hope the world (and US) reaction to this crime againts humanity is a surprise and the punishment for those that start this war be swift and harsh.

Bananamerican's picture

it's death knell...

just sayin'

Max Hunter's picture

Thanks professor..

It's a combination of "death knell" (an omen of death or destruction) and "nail in the coffin." according to urban dictionary.. 
Cast Iron Skillet's picture

but you gotta admit, "death nail" is sort of humorous ... makes me think of vampires.

Flakmeister's picture

Death Nail.... is that like fucking someone and finding out they have AIDS?

DaveyJones's picture

I thought it was the hang nail of death nells

Teamtc321's picture

In 08' diesel blew up from 2.75 gallon to 5 bucks. Our fuel bill rocketed from 30k to 100k per month. The fucker's will use any excuse to hammer fuel cost. Potash went from 255 ton to 865 ton in 3 months, all blamed on China buying. The list goes on as you all know. Get ready for pain, it is coming again. 

And they wonder why small business engine is not cranking out job's!! Want a simple answer? There sick of the criminal BS!   

HungrySeagull's picture

Trucking used to be damn good with the old western union telegraph money coming in on Saturdays and leave next sunday with more than you made the week prior. 1000 here 1000 there... and a bit of stiff on the side to ease the pain of bad roads. (No airride back then)

Anyone out of high school with a good back went to the docks and made good money. All they had to do was stay awake and correctly move the boxes to pallet and into the trailers.

The docks are gone, only to become militarized in security and the drivers got out while the getting is good.

Still orientation fills up for a 3 day motivational period and hit the road ready to go make money. Only to tire and quit after three months.

 

That's ok, there are 50 more scheduled into orientation next week, and the week after that and so on.

 

The next wave is coming as DOT Medical cards being valid and current are being tied to ALL CDL's in interstate commerce and some intrastate as well.

No medical card when renew? No cdl. Period. THose will be regulated to body hauling or honeybees type work. (Tier two)

logically possible's picture

Max, 
I'm still waiting for a swift and harsh punishmint for those that started the last war.

Drunken Monkey's picture

You're in for a good nap. The next stop after $200 is $25 when the economy gets run through the wood chipper and demand is destroyed.

Drunken Monkey's picture

The Fed. wears plaid flannel.

Fedaykinx's picture

bingo, i doubt we'd even see 200, and if we did, it would be very, very brief