Iran Threatens Retaliation If US Carrier Returns To Persian Gulf, Where 5th Navy Is Stationed
Don't look now but oil is spiking as the market is finally realizing that the escalation in the Persian Gulf is more than just for show (which curiously was once again set off by Obama establishing a full financial embargo of all Iranian activity on New Year's Eve, leading the Rial to plunge to a new record low, and about to set a brand new scramble for physical gold in the country on the verge of hyperinflation). At last check WTI was up over $2.50 with the market realizing that either Dalio will be right (central banks going into overdrive) or the Iranian escalation will finally pass the trigger threshold, and Brent was over $110. Today's escalation, just as requested by the US, is not another missile launch but a threat by the Iran military to retaliate if the US carrier John Stennis were to once again cross the Straits of Hormuz and return to the Gulf. As a reminder, as of December 23, as was observed by Stratfor before the hacker takedown and reported here, the Stennis was within shouting distance. From Reuters: "Iran will take action if a U.S. aircraft carrier which left the area because of Iranian naval exercises returns to the Gulf, the state news agency quoted army chief Ataollah Salehi as saying on Tuesday. "Iran will not repeat its warning ... the enemy's carrier has been moved to the Sea of Oman because of our drill. I recommend and emphasise to the American carrier not to return to the Persian Gulf," Salehi told IRNA." Which is interesting because considering that the 5th Navy is stationed in Bahrain, i.e., deep in the Gulf, there is no way that the Stennis or other carriers will not come back, meaning what is likely the terminal escalation has now been set in motion.
"I advise, recommend and warn them (the Americans) over the return of this carrier to the Persian Gulf because we are not in the habit of warning more than once," the semi-official Fars news agency quoted Salehi as saying.
Salehi did not name the aircraft carrier or give details of the action Iran might take if it returned.
Iran completed 10 days of naval exercises in the Gulf on Monday, and said during the drills that if foreign powers imposed sanctions on its crude exports it could shut the Strait of Hormuz, through which 40 percent of the world's traded oil is shipped.
The U.S. Fifth Fleet, which is based in Bahrain, said it would not allow shipping to be disrupted in the strait.
Iran said on Monday it had successfully test-fired two long-range missiles during its naval drill, flexing its military muscle in the face of mounting Western pressure over its controversial nuclear programme.
Iran also said it had no intention of closing the Strait of Hormuz but had carried out "mock" exercises on shutting the strategic waterway.
The good news is that Iran has completed its 10 day wargame exercise without any major incidents. Which also means that the provocation level will escalate even more: after all the difference between the Tonkin Gulf and the Persian Gulf is just one word. Our advice, as usual, is to wait for the inevitable Goldman downgrade of crude which should be the catalyst to go all in on the viscous substance.
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