The Real Iran Threat to the Strait of Hormuz (Causing Oil Prices to Skyrocket)

Ilan Berman

Security,

The Iranian government could wreak real havoc on the global economy not by closing the Strait outright, but rather by narrowing it. By limiting commercial traffic flowing through the crucial waterway (for example, via military exercises), the Iranian regime can successfully drive up the marginal price of world oil without providing the United States with a clear justification to act.

Late last month, the Trump administration kicked its “maximum pressure” campaign against Iran into high gear when it announced that it would no longer provide waivers to countries like China, India and Japan to continue buying Iranian oil without facing sanctions. These countries and their respective companies now face the prospect of being excluded from the American market if they don’t immediately stop buying Iranian crude. The push is part of the White House’s effort “to bring Iran’s oil exports to zero” as a way of ratcheting up economic pressure on Iran’s ayatollahs, National Security Adviser John Bolton has explained.

Iran, meanwhile, has responded to the Trump administration’s recent decision by reviving an old threat. “If we are prevented from using it, we will close it,” Alireza Tangsiri, head of the IRGC’s navy, told Iranian media. Tangsiri was referring to the Strait of Hormuz, a key strategic waterway through which roughly one-fifth of the world’s oil passes.

Other Iranian officials have made similar statements. Over the weekend, General Mohammad Bagheri, the Iranian military’s Chief of Staff, warned that his government would close the Strait if it faced more “hostility” from the United States—that is, if Washington takes concrete steps to limit Iran’s ability to sell its oil abroad.

Such rhetoric is certainly not new. Over the years, the Iranian regime has repeatedly threatened to force a closure of the Strait as part of its ongoing political tensions with the West—most recently last December, when Iranian president Hassan Rouhani warned that such a move was on the table if the White House went ahead and targeted Iranian oil exports.