Iran would respond to an attack by closing Strait of Hormuz
Iran has repeatedly threatened to disrupt global oil commerce if attacked by choking off the Strait of Hormuz. While they do not have the naval power to directly challenge the United States, they could deter U.S. action with naval mines and its torpedo ships.
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In April of this year, as if to drive the point home, Iranian armed forces staged elaborate war games in the Gulf, test-firing a series of new anti-ship missiles capable of devastating any tanker or unwary warship. In the boast of one Iranian admiral, April's "Holy Prophet war games" showed what could be expected by anyone daring to violate Iran's interests in the Gulf. A further demonstration of resolve occurred in August, when Iran fired on and then occupied a Rumanian-owned oil platform ostensibly in a dispute over ownership rights; in truth, the action was intended to show Western companies—including Halliburton, which had won a contract for constructing facilities in the Gulf—exactly which power is in charge there.
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Moreover, when Iran attempted to cause mischief in the strait in 1988, during the socalled tanker war, U.S. naval forces showed near-total dominance in the water, disabling six Iranian vessels and attacking two oil platforms used by Iran for intelligence monitoring. Still, Iran could take a decidedly lowtech lowtech approach to the strait, attempting at the least to raise insurance premiums on tankers traveling through it to prohibitively high levels. Raising insurance premiums (and, accordingly, the cost of petroleum products) would not require the infliction of much damage on ships, per seóit would only require that insurers become nervous that there is enough potential danger ahead that they hedge against this risk by raising premiums. Iran could attempt to use a naval version of the asymmetric warfare that the Iraqi insurgents are usingóand history indicates that if they were creative, the Iranians could cause notable damage. Such a low-tech approach would emphasize quantity, not quality, of mines. Minesweeping and detection are particularly difficult tasks, and a strategy that deployed an irregular pattern of mines would not need the use of high-tech mine-laying vessels or submarines. Mines could be dropped off the back of commercial vessels, to potentially strike oil tankers (or naval vessels) attempting to transit the strait specifically or the Persian Gulf more generally. According to Anthony Cordesman, the Iranians possessed roughly 2,000 such mines as of 2004. And during a test in July 2006, U.S. mine countermeasure vessels stationed in Bahrain were judged to have serious technical shortcomings, including dysfunctional mine warfare hardware 'hampered by cracks and leaks in equipment, damaged wires and cables, faulty indicators and exposed electrical wiring.'
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And Iran has surely attempted to determine the weakest points of the U.S. Navy. The 2000 attack on the USS Cole, in particular, has no doubt been a topic of interest for Iranian strategists. When al-Qaeda used a suicide boat to blow a 40-by-40-foot hole through the hull of the USS Cole, a state-of-the-art American warship, one key weakness of the powerful U.S. Navy was exposed. Although the navy has since increased countermeasures to guard against a similar attack, such as sensors to track smaller vessels, and presumably changed rules of engagement, Admiral Vern Clark remarked after the Cole attack that 'it would be extraordinarily difficult to have ever observed [the attacking boat] in time to do anything to have stopped it.' The frigate USS Samuel B. Roberts was severely damaged and nearly sunk in 1988 by a mine, and the USS Princeton (a guided-missile cruiser) and USS Tripoli (an amphibious assault ship) were badly damaged during the Persian Gulf war, also by mines. Attacks of this kind may be appealing to Iran, should it come under attack by the United States. According to news reports, the Pentagon is 'particularly sensitive' to the risk of similar attacks.
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Doubts that Iran could close the Strait of Hormuz, and doubts that Iran would take its oil offline, however, should not remove fears about either the security of the strait or skyrocketing oil prices. Iran could calculate that doing limited damage to traffic in the Strait of Hormuz would be worth the trouble, in that it would raise the price of oil, which would increase Iranian revenues. According to Cambridge Energy Research Associates, a $5 increase in oil prices would put an additional $85 million per week into Iran's coffers, so Iran could decide that some 'limited' mischief in the strait would be worth the consequences. Although it is impossible to predict what world oil prices would do in the wake of a U.S. attack, knowledgeable observers have estimated that oil could, for a time, move well above $100 per barrel. Deutsche Bank analyst Adam Sieminski estimated that a strike on Iran could produce oil prices of $100 per barrel, and Global Insight chief economist Nariman Behravesh estimated $120 per barrel.
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Iranian closure of the Strait of Hormuz tops the list of global energy security nightmares. Roughly 90 percent of all Persian Gulf oil leaves the region on tankers that must pass through this narrow waterway opposite the Iranian coast, and land pipelines do not provide sufficient alternative export routes. Extended closure of the strait would remove roughly a quarter of the world’s oil from the market, causing a supply shock of the type not seen since the glory days of OPEC. Even if the strait were not closed in the sense of being physically barricaded, military conflict in the area could cause prices to skyrocket in anticipation of a supply disruption—and to remain high until markets could be assured that the flow of commerce had been restored. Consider that when Iraq invaded Kuwait in 1990, temporarily halting the export of oil in both countries, the world price of oil more than doubled merely on the expectation of future shortages. Although excess global supply combined with increased Saudi production helped lower the price within a few months, it did not return to the preinvasion level for nearly a year. Blockage of the strait would pose a vastly greater threat to the flow of gulf oil, and at a time when excess global capacity is lower and the price of oil higher.
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If the United States or Israel attacked Iran, the restraint that previously characterized Iranian behavior in the strait might evaporate. Indeed, in 2006 Iran’s supreme leader, Ayatollah Ali Khamenei, cautioned that although Iran would not be “the initiator of war,” if the United States punished or attacked Iran, then “definitely the shipment of energy from this region will be seriously jeopardized.” The Iranian oil minister made similar comments, hinting that “if the country’s interests are attacked, we will use all our capabilities, and oil is one of them.” One can imagine other events that could bring Iran to the same point of desperation—for example, if it were losing a conventional war with any of its neighbors and wanted to open another front as a punitive measure or a distraction. Short of the extreme case in which the United States preemptively destroys much of Iran’s military, there is an intermediate range of scenarios in which Iran is deeply threatened yet parts of its military are still intact and functioning. It is in this context that threats to block the strait could become reality.
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A 30-page document said to issue from the Strategic Studies Center of the Iranian Navy (NDAJA), and drawn up in September or October of last year, features a contingency plan for closing the Hormuz Straits through a combination of anti-ship missiles, coastal artillery, and submarine attacks. The plan calls for the use of Chinese-made mines, Chinese-built missile boats, and more than 1,000 explosive-packed suicide motor boats to decimate any U.S. invasion force before it can so much as enter the Gulf. Iran’s missile units, manned by the regime’s Revolutionary Guards, would be under instruction to take out more than 100 targets around the Gulf rim, including Saudi production and export centers.The authenticity of the NDAJA document has been vouched for by at least two defectors from Iranian intelligence. Of course, it may not be authentic at all. And military contingency plans are just that—contingency plans; the file cabinets of defense ministries around the world are full of them. Nor do all analysts agree that the Straits of Hormuz can be effectively mined in the first place. Nevertheless, even the threat of mines or suicide boats would likely be enough to induce Lloyds of London to suspend insurance of ships passing through the Straits, causing tanker traffic to cease, oil markets to rise precipitously, and Asian and European economies to reel.
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Yet another way Iran could drive up oil prices is by threatening free passage of oil through the Straits of Hormuz or by engaging in naval mining in the Gulf (by its surface fleet of fast boats or with its smaller submarines) and other key locations (as it did in the late 1980s). Iran has already deployed anti-shipping missiles at Qeshm, Abu Musa Island, and on Sirri Island, all of which are in range of shipping through the Strait. It has also occupied and fortified three islands inside the shipping lanes of the Strait of Hormuz -- Abu Musa, the Greater Tunbs, and the Lesser Tunbs. Given that one-fifth of the world's oil flows through the Straits (as well as roughly a quarter of America's supply of oil) and that no other nation has fortified its shores near Hormuz, an Iranian threat to disrupt commerce there would have to be taken seriously by commercial concerns (e.g., insurers and commodity markets) and other nations.
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Iran's conventional offensive options are limited. It does not pose a ground threat to any of its neighbors because of the small size and limited capabilities of its ground forces, although it could launch limited air, or rocket and missile strikes into neighboring countries (as it did in Iraq on several occasions during the 1990s). The main conventional threat from Iran is in the naval arena -- in particular, the threat it poses to the flow of oil from the region, and to the ability of the United States to project power in the Gulf. Thus, on June 4, 2006, Supreme Leader Ali Khamenei warned, 'If the Americans make a wrong move toward Iran, the shipment of energy will definitely face danger, and the Americans would not be able to protect energy supply in the region.' Iran's mines, missiles, fleet of fast attack craft, submarines (including several new minisubs), several hundred small boats, jet-ski assault craft, and combat divers could wage a 'naval guerilla warfare' campaign that could temporarily disrupt shipping through the Strait of Hormuz, although the strait is probably too wide and deep to be blocked or obstructed for long. Thus, in March 2005, Defense Intelligence Agency director Vice Admiral Lowell E. Jacoby told the Senate Armed Services Committee, 'We judge Iran can briefly close the Strait of Hormuz, relying on a layered strategy using predominantly naval, air, and some ground forces.'
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To put it briefly, the Islamic Republic has its hand on the throttle of the world's economic engine: the stretch of ocean at the mouth of the Persian Gulf known as the Straits of Hormuz, which are only 21 miles wide at their narrowest point. Through this waterway, every day, pass roughly 40 percent of the world's crude oil, including two-thirds of the oil from Saudi Arabia. By 2025, according to Energy Department estimates, fully 60 percent of the world's oil exports will be moved through this vital chokepoint.The Straits border on Iran and Oman, with the two lanes of traffic that are used specifically by oil tankers being theoretically protected by international agreement. Since 9/11, a multinational force comprising ships from the U.S., Japan, six European countries, and Pakistan have patrolled outside the Straits, in Omani waters, to make sure they stay open. But this is largely a token force. Meanwhile, the world's access to Saudi, Qatari, Kuwaiti, and Iraqi oil and gas, as well as other petroleum products from the United Arab Emirates, depends on free passage through the Hormuz Straits.The Tehran regime has made no secret of its desire to gain control of the Straits as part of its larger strategy of turning the Gulf into an Iranian lake. Indeed, in a preemptive move, it has begun to threaten a cut-off of tanker traffic if the UN should be foolish enough to impose sanctions in connection with the Islamic Republic's nuclear program. "We have the power to halt oil supply," a senior Iranian official warned the European Union last January, "down to the last drop."
Iran announced Monday that it has tested a new weapon capable of sinking ships nearly 200 miles away, and reiterated threats to close a strategic waterway at the mouth of the Persian Gulf if attacked.
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