As Pentagon Sends Reinforcements To Straits Of Hormuz, Iraq Redux Looms

Tyler Durden's picture

A few days ago, before the latest breakout in crude sent Brent to all time highs in GBP and EUR (and Asian Tapis in USD just shy of all time highs), we said that "we hope our readers stocked up on gasoline. Because things are about to get uglier. And by that we mean more expensive. But courtesy of hedonic adjustments, more expensive means cheaper, at least to the US government." This was due to recent news out of Iran "where on one hand we learn that IAEA just pronounced Iran nuclear talks a failure (this is bad), and on the other Press TV reports that the Iran army just started a 4 day air defense exercise in a 190,000 square kilometer area in southern Iran (this is just as bad). The escalation "ball" is now in the Western court." We were not surprised to learn that the "Western court" has responded in precisely the way we had expected. The WSJ reports: "The Pentagon is beefing up U.S. sea- and land-based defenses in the Persian Gulf to counter any attempt by Iran to close the Strait of Hormuz. The U.S. military has notified Congress of plans to preposition new mine-detection and clearing equipment and expand surveillance capabilities in and around the strait... The military also wants to quickly modify weapons systems on ships so they could be used against Iranian fast-attack boats, as well as shore-launched cruise missiles" Which means the escalation slider was just shifted up by one more level, as Iran will next do just what every actor caught in an Always Defect regime as part of an iterated prisoners' dilemma always does - step up the rhetoric even more, as backing off at this point is impossible. Which means that crude will go that much more higher in the coming days, as now even the MSM is starting to grasp the obvious - from the Guardian: "The drumbeat of war with Iran grows steadily more intense. Each day brings more defiant rhetoric from Tehran, another failed UN nuclear inspection, reports of western military preparations, an assassination, a missile test, or a dire warning that, once again, the world is sliding towards catastrophe. If this all feels familiar, that's because it is. For Iran, read Iraq in the countdown to the 2003 invasion." And the most ironic thing is that the biggest loser out of all this, at least in the short-term is.... Greece.

As a reminder, here is an update of US naval assets, courtesy of a recently up and running Stratfor:

More on the latest very much anticipated defection from the US in what is setting up to be either the biggest dud of geopolitical foreplay in history, or potentially the start of a new World War (because the Muslim cresent will not take too lightly to any joint or standalone US/Israeli aggression).

The military also wants to quickly modify weapons systems on ships so they could be used against Iranian fast-attack boats, as well as shore-launched cruise missiles, the defense officials said.


The changes put a spotlight on what officials have singled out as potential U.S. shortcomings in the event of conflict with Iran. The head of Central Command, Marine Gen. James Mattis, asked for the equipment upgrades after reviews by war planners last spring and fall exposed "gaps" in U.S. defense capabilities and military preparedness should Tehran close the Strait of Hormuz, officials said.


The Central Command reviews, in particular, have fueled concerns about the U.S. military's ability to respond swiftly should Iran mine the strait, through which nearly 20% of the world's traded oil passes.


"When the enemy shows more signs of capability, we ask what we can do to checkmate it," a U.S. military officer said. "They ought to know we take steps to make sure we are ready."


The U.S. is concerned that Israel—which believes that Tehran will soon be able to assemble a weapon, and that time is running short to stop the bid—may choose to strike Iran by this autumn to stymie such a program. That, defense officials worry, could provoke retaliation that could prompt U.S. military action to defend its troops and key allies, and to keep the Strait of Hormuz open.


Central Command officials have told lawmakers they want the new mine-detection systems fielded before this fall, according to defense officials, underlining the urgency of preparedness.


In addition, U.S. special-operations teams stationed in the United Arab Emirates would take part in any military action in the strait should Iran attempt to close it, defense officials said. A military official said these forces have been working to train elite local forces in Gulf nations including the U.A.E., Bahrain and Kuwait, but added: "They would be used in the event of active operations."

Alas, as our game theory familiar readers will attest, the realistic outcome of recent events is not encouraging:

If two players play prisoners' dilemma more than once in succession and they remember previous actions of their opponent and change their strategy accordingly, the game is called iterated prisoners' dilemma.


If the game is played exactly N times and both players know this, then it is always game theoretically optimal to defect in all rounds. The only possible Nash equilibrium is to always defect. The proof is inductive: one might as well defect on the last turn, since the opponent will not have a chance to punish the player. Therefore, both will defect on the last turn. Thus, the player might as well defect on the second-to-last turn, since the opponent will defect on the last no matter what is done, and so on. The same applies if the game length is unknown but has a known upper limit.

For those confused, terminal defection means pushing the "Launch" key. And even mainstream journalists appear to have grasped what has finally dawned upon the energy market (if with the now usual 6-8 week delay):

A decisive moment may arrive when Barack Obama meets Israel's prime minister, Binyamin Netanyahu, in Washington on 5 March. "The meeting … will be definitive," said Ari Shavit in Haaretz. "If the US president wants to prevent a disaster, he must give Netanyahu iron-clad guarantees the US will stop Iran in any way necessary and at any price after the 2012 [US] elections. If Obama doesn't do this, he will obligate Netanyahu to act before the 2012 elections."


If accurate, this is not much of a choice. It suggests military action by the US or Israel or both is unavoidable, the only question being one of timing. Objectively speaking, this is not actually the position. All concerned still have choices. The case against Iran's nuclear programme is far from proven. It is widely agreed that limited military strikes will not work; a more extensive, longer-lasting campaign would be required. And Obama in particular, having striven to end the Iraq and Afghan wars, is loath to start another.


But as with Iraq in 2003, the sense that war is inevitable and unstoppable is being energetically encouraged by political hardliners and their media accomplices on all sides, producing a momentum that even the un-bellicose Obama may find hard to resist.

Will Obama truly risk sending gas prices to all time highs month ahead of his election, just in time to send the global economy into a spiraling recession where not even the fabled US decoupling (purely driven by the $2 trillion in liquidity expansion by non-US central banks)? Who knows: however, if he hopes to use the iraq playbook, he may be disappointed. Again from the Guardian:

In some key respects, the Iran crisis is distinctly different from that over Iraq in 2002-03. As matters stand, similarly strident warmongering surrounding Iran is thus hard to understand or explain – unless the ultimate, unstated objective is not to curb Iran's nuclear programme but, as in Iraq, to overthrow its rulers.



George Bush and Tony Blair claimed a moral imperative in toppling the "monstrous" dictatorship of Saddam Hussein. But the much vilified Mahmoud Ahmadinejad, Iran's president, is no Saddam, and neither is the country's bumbling Supreme Leader, Ayatollah Ali Khamenei. The Iranian regime is repressive and sporadically brutal, but so too are many developing world governments. Unlike Saddam's Ba'athists, it has significant democratic and ideological underpinning. As a bogeyman whose depredations might justify international intervention, Ahmadinejad is a flop.

Weapons of Mass Destruction

Saddam, notoriously, had no deployable or usable WMD, but his overthrow was primarily justified by the mistaken belief that he did. The present western consensus is that Iran is seeking nuclear weapons capability, but does not have an atomic bomb and is not currently trying to build one. Khamenei said this week that nuclear weapons were "useless and harmful" and that possessing them was sinful . Netanyahu's belief that Israel faces an imminent, existential threat is visceral rather than fact-based. Israel's refusal to acknowledge its own nuclear arsenal, let alone contemplate its reduction, further undermines the case for action.



Plenty of evidence exists that Iran supports, or has supported, armed militants, jihadis, and anti-Israeli and anti-western armed groups in Palestine, Lebanon, Syria, Iraq and Afghanistan, providing financial and political backing, arms and training. In this respect, its behaviour is more threatening to western interests than was that of Saddam's secular regime, no friend to Islamists. But limited or even protracted attacks on Iran's nuclear and/or military facilities would not end these links, unless there was a shift of political direction in Tehran.


Strategic power-games

Iraq was considered important for its strategic position at the heart of the Arab Middle East and its economic potential, especially its oil reserves. Similarly, there can be no doubt the US and Britain would like to see energy-rich Iran return to the western camp, as in the pre-revolution days of the Shah. Conversely, Iran's military is more powerful and more committed to the defence of the status quo, from which it benefits greatly, than was Iraq's. The potential disruption to oil supplies and western economies, not to mention the impact of asymmetric Iranian counter-attacks, makes a resort to war contingent on producing lasting dividends.


Political imperatives

In contrast to the splits over Iraq, the main western powers are united in their determination to bring Iran to heel. As well as Netanyahu, David Cameron, Nicolas Sarkozy and Barack Obama have all declared an Iranian bomb unacceptable. Their inflexibility thus makes war more rather than less likely should Iran refuse to back down. "Having made the case for urgency and concerted action, it would be difficult for Obama to tell the world 'never mind' and shift to a strategy that accepts Iranian membership in the nuclear club," said Michael Gerson in the Washington Post.

Yet while nothing may well be the final outcome, one thing is certain: Greece is in deep trouble. As a reminder, the insolvent country is one of those affected by the Iranian decision to cut off European exports. And as Athens News reports: "Greece relied on Iran for more than half of its oil imports during some
months last year
after traders and oil majors pulled the plug on
supplies and banks refused to provide financing for fear that Athens
would default on its debt."

Major traders are in talks with Greece to supply crude oil and help the country cut reliance on Iranian oil ahead of a European ban, in a sign that they are happier about Greece's creditworthiness following a second debt bailout. Greece turned to Iran as a supplier of last resort last year despite pressure from Washington and Brussels to end trade as part of a campaign against Tehran's nuclear programme that the West says is for arms and Iran says is for energy.


Traders told Reuters that Swiss-based Totsa, the trading arm of French oil major Total, and trading house Mercuria were in separate negotiations with Greek refiner Hellenic Petroleum to help it replace Iranian crude. Glencore, a leading Swiss-based commodities trader and one of the few that conducted business with Greece during the debt crisis, may also boost supplies, trading sources said.


Two industry source said talks were at advanced stages. A third industry source said negotiations were at an early stage. "If something were to happen, it would be unlikely before summer," one source said.

The reason for the delay? Why certainly that Greece has some money to pay, i.e., passage of the bailout (that Greece won't see a single penny out of it is a different story entirely)

Hellenic acknowledged earlier this week that it was buying oil from Iran and paying for the shipments later, terms known in industry jargon as open credit terms. But the refiner also said that replacing Iranian oil would be "easy" with supplies from Saudi Arabia, Iraq and Russia. Traders expect the terms offered by alternative oil suppliers to be far less generous, as many are still unable to enter into agreements with Greece because of the risk associated with the country's debt.


Part of the reason for swapping crude oil for products is that Hellenic is unable to obtain letters of credit from banks because of lingering default fears.


"They have liabilities and banks could come in and demand payment," said a London-based trading head who decided not to enter talks with Hellenic, saying it was too risky for his firm.


However, Greece's second bailout this week provides reassurance that any crude supplied to a refinery would not be caught up in a messy national default. Hellenic, which has 350 million euros of debt maturing this year and 1.3 billion in 2013, has started refinancing discussions with banks. It said it hoped that the bailout deal would allow Greece to return to markets and ease Greek companies' refinancing strains.

In other words, war or no war, Greece better pray that Europe at least pretend to fund the second bailout agreed upon on July 21, 2011, as otherwise, the country will be out of crude by the summer. Of course, if there is no bailout, the country will also be broke by then too, with rioting and bank runs a daily occurrence. Perhaps seen in this light, a gasoline shortage doesn't seem all that bad...

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Caviar Emptor's picture

Mopeds and bicycles, bitchez! Adult tricycles for the gravitationally challenged

TruthInSunshine's picture

I get the distinct impression that the U.S. actually just officially smacked down Israel and neocons within its own agencies with an official report released on Friday concluding that "that there is no hard evidence that Iran has decided to build a nuclear bomb" (that's some strong and unambiguous language).

I didn't expect that, to be honest, and if true, it runs diametrically opposite to the reporting of The Guardian.

Then again, nothing is as it appears right now.

Here's the report on the official U.S. findings that I'm speaking of:


U.S. Agencies See No Move by Iran to Build a Bomb

The New York Times

By and

Published: February 24, 2012

WASHINGTON — Even as the United Nations’ nuclear watchdog said in a new report Friday that Iran had accelerated its uranium enrichment program, American intelligence analysts continue to believe that there is no hard evidence that Iran has decided to build a nuclear bomb.

Recent assessments by American spy agencies are broadly consistent with a 2007 intelligence finding that concluded that Iran had abandoned its nuclear weapons program years earlier, according to current and former American officials. The officials said that assessment was largely reaffirmed in a 2010 National Intelligence Estimate, and that it remains the consensus view of America’s 16 intelligence agencies.

Caviar Emptor's picture

Intelligence reports and spy agency assessments remind me of the 2003 pre-invasion UN Iraq hearings on WMD. 

TruthInSunshine's picture

My recollection is that evidence was being manufactured that Iraq possessed and was building more WMD (in the most vague sense), culminating with a presentation by Colin Powell before the U.N. emphatically insisting that Iraq had even gone so far as to source yellowcake from Nigeria (and much of these claims that we now know to be patently false were culled from the infamous source known as 'curveball' and also a British graduate student's thesis paper, which literally was a work in science fiction).

This latest reaffirmation of 'no intent to build nuclear devices' would run contrary to the build-up to the pretext for the invasion of Iraq.

Conrad Murray's picture

Just want to drop a little thank you for always being on the pursuit of truth, and sharing what you find along the way. It is much appreciated.

TruthInSunshine's picture

Thanks, Conrad.

I remember reading that article on Friday and thinking about the ramifications it may have for those who have open long positions on crude over the weekend.

It would have been just another footnote except for the fact that it was so strongly worded and claimed unanimity in consensus among "all 16 U.S. intelligence agencies" that it grabbed my attention and screamed out that there was something serious happening in terms of ratcheting down the drumbeat for escalation with Iran.

economics1996's picture

Here is a blog I did on gas prices.  For the business majors this will be a refresher course, most of you will know this. 

The blog was aimed at the ignorant public.

CIABS's picture

Maybe there's a game-theory explanation for Iran escalating the rhetoric, but maybe the Iranians are confident that they won't be attacked so long as they don't attack first, which I doubt they will do.  It's difficult and extremely risky for Israel to attack Iran alone.  It's not so difficult for the U.S. to do it but it's very risky.  If Iran develops nuclear weapons, they won't use them first, and probably not in retaliation, either.  What is at stake is certain people's plans to turn Iran into a failed state or a compliant U.S. ally.

The Big Ching-aso's picture



Ass chaps, razor boomerangs, subterranean midgets, and Mel Gibson here we come.

Ima anal sphincter's picture

Well.....starting war with Iraq. Starting war with Libya. Starting war with Afghanistan. Starting war in Egypt. Starting war in Syria.

Voting in Federal Reserve. Voting in Affirmative Action. Allowing illegal immigration. Starting the multitude of useless "Departments" of bullshit. Allowing year after year...traitor after traitor to serve in government positions.  Letting our media be completely controlled by Zionist assholes.  (The "list" of governmental actions against the people is truly mind boggling when looked at as a whole.)

I've only scratched the surface of "dumbest thing ever." Our government is not "our" government. When it is......all this BS stops.

AnAnonymous's picture

Illegal immigration, affirmative action... All that is part of being a US citizen.

Illegal immigration? Started on 1776;July,4th
Affirmative action? Started on 1776,July,4th

prole's picture

You haven't killed your quota of Tibetans for this weekend Comrade.

Get to work.

redpill's picture

Speaking of which, all this is really doing is driving the Iranians into the hands of the Chinese.  Now whatever the outcome we won't get their oil.  Neocons aren't even efficient imperialists, just retards.

Abitdodgie's picture

If we start a war with Iran we may as well start bombing China . Oil prices will imediatly go to 250/300 a barrel, which will stall out the economy ,more people loose there jobs /homes and we will be paying $10/15 for gas which will then be restricted, bombs will start falling on London , so if all these people who think it would be a good idea to invade are happy living like the above, then i dont see a problem.  We all know it will lead to global thermonuclear war . GAME OVER.

caconhma's picture

Zionists Banking Mafia and neo-cons are pushing the world to the WWIII.

Apparently, Hiroshima and Nagasaki was not enough for international gangsters and warmongers. People just forgot the horrors. So, the world needs a “new reminder”.  Consequently, I do not mind if Iranians build and use nukes on Israel. Al least, it will save tens of millions Americans from a slaughter in the WWIII holocaust.




john39's picture

This just in, Iran halts oil shipment to Greece. good on iran, hit the EU where it hurts.

Jack Burton's picture

The Greeks are so screwed! Iran knows this much, Europe and America are in very fragile economic condition, anything they can do to spike oil prices is a major plus. Russia will also back them in this as they stand to benefit too.

non_anon's picture

unless your a lame duck president looking to get re-elected

Jack Burton's picture

What, like our last self-proclaimed "War President". Mr. "I am a war president" Bush. That idiot is the author of the 2008 collapse, he was even in charge when the collapse happened after 7 years in charge.

Bush? Obama? Big friggen difference!

Bringin It's picture

I agree CIABS.  More like the Cuban Missle Crisis when the world pulled back from the edge.

After the election [whoever wins] look for some strange things to happen in our increasingly strange epoch.

Chimerican's picture

"If Iran develops nuclear weapons, they won't use them first, and probably not in retaliation, either.  What is at stake is certain people's plans to turn Iran into a failed state or a compliant U.S. ally."

Thank you for that bit of analysis. Your mind reading is most appreciated. I can only hope that you have planted this certainty into the minds of those who would return the Caliphate. 

goldfish1's picture

Short answer: inflation caused by FED and federal fiscal policies.

The global demand issue arising from the creation of fiat weighs heavily as well.

ChacoFunFact's picture

This piece covers this exact subject.  There are forces within the US government itself that are on the side of Freedom and Truth.

Caviar Emptor's picture


Former aide: Powell WMD speech 'lowest point in my life'

:-) I remember his pencil drawing 

In the speech, Powell said he had relied on information he received at Central Intelligence Agency briefings. He said Thursday that then-director George Tenet "believed what he was giving to me was accurate."

But, Powell said, "the intelligence system did not work well."

"There were some people in the intelligence community who knew at the time that some of those sources were not good, and shouldn't be relied upon, and they didn't speak up," Powell said


TruthInSunshine's picture

It's pathetic to see Powell play the "gee, I knew it was wrong, but I did it anyway, and I'm terribly regretful" card.

That he knew it was wrong at the time makes him less worthy of leniency or forgiveness, not more so.

He can scrub as hard as he wants, but his hands will always remain stained with much blood.

oldman's picture


Kudos to you for saying so well what needs to be remembered about Iraq and Powell. I am having a really bad time imagining that the public in the US has not reacted against this stupid game. And though, we may have forgotten the lies, deception, and drunken brutal display of power against Iraq in only nine years, we may be certain that the rest of the world has not. Hopefully, someone will come to his or her senses and call this madness off.

A war of the size that this one will be is not the answer to the world's problems; it will push the human species completely over the edge. This time it is different and a war will not set the economy right(it never has) as some fools are claiming. My response to the end of the Mayan Calendar has always been to buy a 2013 calendar, but if there is a war

"You can kiss yo' ass goodbye-------" as Nuclear War by Sun Ra says.

I cannot believe any of this is possible ----it just can't be!

hope for a miracle, folks-----a war will not end well for our species              om   


AnAnonymous's picture

It's pathetic to see Powell play the "gee, I knew it was wrong, but I did it anyway, and I'm terribly regretful" card.


Pathetic maybe. Lucrative surely.

Regimes sending innocent people to jail existed before the rise of US citizenism.

What did not exist near the current extent, is regimes allowing people to make money confess misdeeds in the press while being charged of nothing.

Powell is a US citizen.

Did he take his share engineering the war against Iraq? Yes, he did.

Did he make money by confessing he knew the stuff was hogwash? Yes, he did. This point was the marketing pinacle to sell his memoirs book.

Money making.

US citizen hatred on justice makes it possible to play all angles.

You can deny facts, making money doing so and later, confessed knowning you denied facts, making money doing so, walk free of any charges and to top it all, be considered a national hero.

That is indeed the legacy of US citizenism to humanity, another giant leap for mankind.

JohnnyBriefcase's picture

"US citizen"

You keep using that word. I do not think it means what you think it means.

AnAnonymous's picture

Absolutely right. 'Americans' know best. It is well known.

Without the gift of 'Americanism' to the world, one shudders at the thought of what humanity would be.

JohnnyBriefcase's picture

Does that include central and south america?

AnAnonymous's picture

Ah, ah.

Made me laugh.

Here's the perfect example of why 'US citizenism' should be used instead of 'Americanism'

That's exactly that. Dilution in the larger base possible.

bigkahuna's picture

what with all the hyperinflation and currency debasement---that could not be, could it?

AnAnonymous's picture

Dont stop there if you want to hijack freedom in a US citizen move, humanity demands it.

Free the US of A.

Arent the Americans deserved to be free too? Or is freedom only reserved to Tibetans or Taiwanese? Ah, yes, Indians are only good when dead.

Note to US citizen chinese: you know what you have to do to be recognized as US citizens by historical US citizens.

nmewn's picture

Chinese citizenism is eternal!!!

Thorny Xi's picture

The Mormons will get everyone in the world a green card posthumously...

Pope Clement's picture

AnAn quit being such an inscrutable prick - how about a link on what 'citizenism' means ?

IQ 101's picture

Citizenism means you are blobbing up, i think.I could use a link on Blobbing up, to get a better picture.

DaveyJones's picture

Powell mkes me sick because unlike Cheney he actually has  human conscience ...but the bstard did it anyway

goldfish1's picture

He legitimized the war to the America people by his actions. He's a traitor to this country. He is nothing more now than a former Cheney's henchman.


Seer's picture

This is Powell's history.  His involvement of My Lai shows that this went WAY back:


oldman's picture

All I remember about the dude is that he was the guy who preached 'overwhelming force' as an academic in the provost marshall's

He ate a lot more than he will ever pay for

this guy is a pig king----how could anyone have expected other knowing his history

And how many more?

Survival is not simply guns, gold. and food

It is a mindset that has nearly escaped the US    Get ready, folks if this war goes------

Well, instead of my naming it    think a bit and fill in the blank

see ya on the other side                       om

grgy's picture

What if he really was deceived?  It's hard to use the word "integrity" and the Bush (Obama) administrations in the same sentence, but I think Powell had the most.

TruthInSunshine's picture

If certain people are to be believed, his act of literally shouting that he "wasn't going to read this bullshit" in the car driving him to the now infamous U.N. Security Council presentation just before he read that bullshit at the now infamous U.N. Security Council presentation would indicate that he is not the duped you are looking for.

Bringin It's picture

Funny how they give this job to the Black guy.

overbet's picture

That's my down vote by mistake. I retract it. Stupid fucking iPad fat finger. Sry