Iran's Hormuz 'Oil Weapon' Inert Ordnance
Max Schultz agrees: Iran’s Oil-Weapon Threat Rings Hollow.
The implication is that such actions would set off a depth charge in the international energy economy, so the U.S. and its allies should back down.
Don’t believe it. Certainly Iran’s leaders are unhinged enough to try making good on one of those two promises. Either action would send oil soaring, perhaps well over $100 per barrel. Gasoline would spike too, perhaps to $5 or $6 per gallon. The dirty little secret about Iran’s threats, however, is though they might cause some pain, they wouldn’t cripple our economy. The American economic engine is too strong to be brought to its knees by Iran’s machinations, and the weapon Tehran threatens to wield is not as menacing as they would have us believe.
Energy Secretary Samuel Bodman noted recently that the United States could weather a hypothetical Iranian oil disruption and foil Tehran’s efforts at nuclear blackmail. The United States Strategic Petroleum Reserve currently holds upward of 700 million barrels. The Bush administration would not hesitate to release oil from the reserve if Iran closed its taps. That’s the sort of leverage we didn’t have during the 1973 energy crisis.
But the chief reason this is not your father’s oil embargo is that the U.S. economy is much less susceptible to being harmed by an oil shock today than it was during the 1970s.
Thanks to Max for ably highlighting why Iran's 'Oil Weapon' would have little effect from this side of the pond's economic perspective. After citing in detail why the American economy would not suffer a mortal blow, he gets to the principle reason, as ThreatsWatch has asserted repeatedly, why Iran's touted 'Oil Weapon' is more akin to inert training ordnance if it involves shutting the Strait of Hormuz or pulling Iranian oil from the international markets.
At the end of the day, the Iranians probably won’t go the route of pulling their oil from the market, which would hurt Iran more than it would us. Iran depends on oil sales for 90 percent of its export revenues and roughly half of its government’s budget. Halting oil sales would be like the incompetent suicide bomber who blows himself up without getting near his target.
Iran is also unlikely to try to stop shipping in the Strait of Hormuz, as it would likely involve military action against its Islamic neighbors and fellow OPEC members (not to mention tankers bearing China’s flag). Iran’s beef is with the West, not with Saudi Arabia or Kuwait.
While we do not necessarily share the belief that Iran is terribly concerned about harming Saudi Arabia or Kuwait in the process, Iran remains quite concerned about destroying themselves economically...at least before the apocalyptic nihilists among them seek the final push to "pave the way for the return of the Mehdi (12th Imam)."
Until then, the Iranian 'Oil Weapon' should be recognized as a strategy of maintaining oil prices as high as possible with maximum flow, without which funding for their nuclear sprint evaporates.