Gas at the Pump Could Go To $20 If War Comes to the Straits of Hormuz

This article is from the archive of The New York Sun before the launch of its new website in 2022. The Sun has neither altered nor updated such articles but will seek to correct any errors, mis-categorizations or other problems introduced during transfer.

The New York Sun

Iran’s threat to close the Strait of Hormuz is a promise of heart attack for the world’s economy and a challenge for military planners.

Yesterday, Iran doubled its taunt by sentencing a former marine with dual Iranian-American citizenship to death, for spying.

The moves set up America and its Western allies for a confrontation with Iran.

A clash would be the third armed conflict after Iraq and Afghanistan. The former two began triumphantly until they transformed into quagmires. How is a new conflict likely to evolve?

Iran has used American hostages in the past to extract money. Whether it crosses this line to execute the 28-year-old Amir Mizraei Hekmati, who served in Iraq, remains to be seen.

At the moment, Saudi Arabia, Iraq, Iran, and the UAE, are shipping 16 million barrels daily on tankers crossing the narrow strait. To put it in perspective the United States Energy Information Administration notes this represents a substantial portion of 84 million barrels the world uses daily to energize factories, run trucks, trains, and cars, heat homes, and produce food.

Some way must be found to stop Iran from reaching full nuclear armament, but short of a war, this leaves sanctions, which have failed, so far.

Economists warn of a doubling of the price of oil in the first 48 hours of a Hormuz Strait closure. In reality oil prices could go well above that $200 a barrel threshold —translating at the pump into astronomical numbers in America and Europe of $15 to $25 a gallon.

Intelligence agencies have long predicted that if war ensues, Iran’s first action will unleash scores of dormant terror and sabotage cells all over the Gulf region to destroy oil and natural gas facilities in Saudi Arabia, Kuwait, Qatar, Oman, the UAE, reaching perhaps as far as Egypt, and that it will order military chaos in Lebanon via Hezbollah and in Gaza via Hamas. For its part, America, as it did during the eight-year Iraq-Iran war that began in1980, can be expected to bomb Iran’s coastal infrastructure and oil facilities.

The West would have to activate its strategic reserves of oil immediately to alleviate panic. But wars invoke Murphy’s Law: “anything that can go wrong will go wrong.”

How much destruction would be wreaked on the straits and the Gulf region? How much damage can be inflicted on Western and American fleets in or near the Persian Gulf.

Saadallah Al Fathi, the senior Iraqi official who ran the country’s refining industry for two decades until the fall of Saddam Hussein, says the challenge will be made much tougher by changes Iran has implemented in its military strategy. “This time around, the threats and counter threats are far more serious,’’ Mr. Al Fathi wrote this week in the Gulf News.

In 1990, after Saddam Hussein invaded Kuwait, it took 18 months to assemble a force of 500,000 and push him out. It took another two years to douse the fires he lit to Kuwaiti oil fields. After the 1967 Israeli-Arab war, the vital Suez Canal waterway of Egypt was blocked with sunken ships for 12 years. It took three years to clean it up. Cleaning up Hormuz will be far more complicated, if the Iranian regime holds.

Learning lessons from its military conflicts with Iraq and the US, Iran’s Revolutionary Guards spent the past two decades assiduously building an impressive fleet of small fast attack vessels. The strategy is wide scale disruption and asymmetric war. Iran just ended a highly publicized15 days of maneuvers to show its equipment.

As for oil America and other Western powers stored underground in salt cavities and on ships, Mr. Al-Fathi quotes OECD statistics citing a total of 4.2 billion barrels.

Here again the perils of Murphy’s Law resurface. How many parts can go wrong extracting that oil? How many of these reserves are damaged or leaking? We have never tried to access those reserves on a major scale before.

And how will the psychological impact play? In 1973 when Arab oil producers imposed a much smaller boycott of oil exports to the West, disorders and disruptions ensued which are still in memory.

Most critical is how long can Iran hold under military assault? In the 1980s, despite the West’s military support of Iraq, intelligence feeds, and some $ 60 billion from Saudi Arabia, the UAE and Kuwait, Saddam Hussein came close to defeat.

Iran today is stronger. It is also much bolder.

In the past few weeks it publicized war games and maneuvers. Yesterday it taunted America with the death sentence pronounced on Mr. Hekmati. Two weeks ago it bluntly warned Western navies not to cross into the Persian Gulf via the Strait of Hormuz. The warning included the United States carrier task force that exited from there just recently. Such an attempt Iran said would be a casus belli.

America responded that closure would be an act of war and that it stands “always ready to counter malevolent actions.” Someone has to blink. This is the real thing.

The New York Sun

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