Squaring the Culture

"...and I will make justice the plumb line, and righteousness the level;
then hail will sweep away the refuge of lies,
and the waters will overflow the secret place."
Isaiah 28:17

01/07/2008 (4:41 pm)

The Strait of Hormuz — Why We Care

Five Iranian gunboats played Chicken with the US Navy on Saturday, turning aside literally seconds before the US ships opened fire.

From the AP release:

Iranian boats harassed and provoked three American Navy ships in the strategic Strait of Hormuz, threatening to explode the vessels, U.S. officials said Monday, calling it the most serious such incident in years…

Five small boats began charging the U.S. ships, dropping box-like objects in the water in front of one of the ships and forcing the U.S. ships to take evasive maneuvers, said Cosgriff, commander of the 5th Fleet and of naval forces in the U.S. Central Command region.

The Iranian boats came to less than 500 yards from the U.S. formation and at one point broke into two groups, one group going to one side and the other to the others side of the Americans. Officials said there were no injuries.

“At one point during this encounter … the ships received a radio call that was threatening in nature, to the effect that they were closing (in on) our ships and that the ships would explode — the U.S. ships would explode,” Cosgriff said.

Reuters also covered the incident.

Obviously, we should be concerned because a war with Iran would be costly and dangerous, and could further destabilize the Middle East. Of course, we’ve been engaged in a war-by-proxy with Iran for at least four years, in Iraq. Still, we’ve chosen not to formalize hostilities with Iran. This weekend’s events came close to changing that.

There are six important choke points through which a large portion of the world’s oil passes. The Strait of Hormuz, at the entrance to the Persian Gulf, is the one that passes the most oil to the world. From the DOE’s explanation:

In 2007, total world oil production amounted to approximately 85 million barrels per day (bbl/d), and around one-half, or over 43 million bbl/d of oil was moved by tankers on fixed maritime routes. The international energy market is dependent upon reliable transport. The blockage of a chokepoint, even temporarily, can lead to substantial increases in total energy costs. In addition, chokepoints leave oil tankers vulnerable to theft from pirates, terrorist attacks, and political unrest in the form of wars or hostilities and shipping accidents which can lead to disastrous oil spills.

Of that 85 million barrels per day, 16.5 million barrels, or just under 20%, passed through the Strait of Hormuz in 2006. If the US were to go to war with Iran, they could stop that much oil from reaching the world markets until US troops captured the northern shore of the Strait. Worse, they could mine the Strait, as they did during the Iran-Iraq war back in the 1980s. Either way, war with Iran means sharply higher oil prices, at a time when oil is at its highest historical price.

The brief showdown in the Strait caused crude oil futures prices to jump $.49 on the world markets for a few hours over the weekend, before sliding back down.

This is why the Iranian Navy started performing war games maneuvers in the Strait of Hormuz early last year. Iran understands that the power to destroy a resource constitutes control of that resource. Iran does not need the oil that passes through the Strait nearly as badly as the rest of the world does.

Photo by Reuters.

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