Tuesday, January 15, 2008

Some more interesting thoughts on the Strait of Hormuz

Found here, with some interesting assessments of who suffers more if the Strait of Hormuz were closed. Of course, there are some howlers such as this dismissal of Omani sovereignty over at least a chunk of the Strait:
It seems that Iran has actually enough power to block the Strait of Hormuz by sinking several big ships in the main channels of the traffic (although most of the traffic separation lines are in the side of the Strait, which are technically, i.e. according to the international law of Seas, part of Oman's Territorial waters.) Also, Iran may interrupt the shipping in the Strait of Hormuz by mining the international waterway or directly attacking the target vessels. Such actions are enough to stat a full-scale war between the regime of Iran and all other concerned forces.
Of note, though, is another aspect of shutting one's country off from the best sea outlet:
This is going to be two-sided weapon. The oil prices over a hundred dollar will have serious consequences for the international economy. However, Iran as an oil exporting country will be in a difficult situation if the export of oil is stopped. "Iran's government derives about 50% of its revenues and most of its foreign currency from oil sales..." (7) Iran is not only relying on the oil revenues for its economy, but also it is an importer of the oil products. Iran has not the capacity to produce enough gasoline for the internal consumption and it has to import a major part of its needs from other countries. (In recent years, Oman has been a major source of gasoline imports for Iran). According to Peter Kiernan: "...although Iran is the second largest producer in OPEC, its domestic refining capacity does not meet local demand, and it must import about 170,000 bpd of gasoline, which costs it as much as $4 billion a year..." (8)

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