U.S. Congress: Iran Poses a Serious Threat to the Strait of Hormuz

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U.S. Congress: Iran Poses a Serious Threat

to the Strait of Hormuz

Anwar Altaqi – Esam Aziz

The U.S.Congressional Research Service (CRS) issued a report August 8 explaining the threatIran poses in the Strait of Hormuz. While we have discussed this matter in previous issues of this publication, the CRS report sheds clearer light on a much wider variety of threats Iran brings to the sensitive waterway that is central, due to heavy oil traffic, to theglobal economy.

The report condensed its contents in a piercing manner. “Some officials of the Islamic Republic of Iran have recently renewed threats to close or exercise control over the Strait of Hormuz. Iran’s threats appear to have been prompted by the likely imposition of new multilateral sanctions targeting Iran’s economic lifeline — the export of oil and other energy products. In the past, Iranian leaders have made similar threats and comments when the country’s oil exports have been threatened. However, as in the past, the prospect of a major disruption of maritime traffic in the Strait risks damaging Iranian interests. U.S. and allied military capabilities in the region remain formidable. This makes a prolonged outright closure of the Strait appear unlikely. Nevertheless, such threats can and do raise tensions in global energy markets and leave the United States and other global oil consumers to consider the risks of another potential conflict in the Middle East. This report explains Iranian threats to the Strait of Hormuz, and analyzes the implications of some scenarios for potential U.S. or international conflict with Iran,” the report reads.

According to the CRS, these scenarios include:

• Outright closure: An outright closure of the Strait of Hormuz, a major artery of the global oil market, would constitute an unprecedented disruption of global oil supply and contribute to higher global oil prices. However, at present, this appears to be a low-probability event. Were this to occur, it is not likely to be prolonged. It would likely trigger a military response from the United States and others, which could reach beyond simply reestablishing Strait transit. Iran would also alienate countries that currently oppose broader oil sanctions. Iran could become more likely to actually pursue this option if few or no countries are willing to import its oil.

• Harassment and/or infrastructuredamage: Iran could harass tanker traffic through the Strait through a range of measures without necessarily shutting down all traffic. This took place during the Iran-Iraq War in the 1980s. Also, critical energy production and export infrastructure could be damaged as a result of military action by Iran, the United States, or other actors. Harassment or infrastructure damage could contribute to lower exports of oil from the Persian Gulf, greater uncertainty around oil supply, higher shipping costs, and consequently, higher oil prices. However, harassment also runs the risk of triggering a military response and alienating Iran’s remaining oil customers.

• Continued threats: Iranian officials could continue to make threatening statements without taking action. This could still raise energy market tensions and contribute to higher oil prices, though only to the degree that oil market participants take such threats seriously.

In fact, events quickly supported what the CRS wrote. On August 27, the head of the navy of Iran’s Islamic Revolutionary Guard Corps (IRGC), General Alireza Tangsiri, said that Iran had full control of both the Persian Gulf itself and the Strait of Hormuz that leads into it. At the beginning of August, Iran began a large-scale exercise in the Strait of Hormuz involving more than 50 small boats, practicing “swarming” operations that could potentially shut down the vital waterway if ever deployed. The drill came after U.S> President Donald Trump pulled his country out of the nuclear accord with Iran and leaders of both countries exchanged fiery rhetoric.

“The [United States] and our partners provide and promote security and stability in the region on a daily basis,” Lt. Chloe Morgan, U.S. Naval Forces Central Command spokesperson, said in a recent statement. “Together, we stand ready to ensure the freedom of navigation and the free flow of commerce wherever international law allows.”

Returning to the CRS report, the document states the results of the scenarios as potential paths for the conflict by saying “If an oil disruption does occur, the United States has the option of temporarily offsetting its effects through the release of oil from the Strategic Petroleum Reserve. Such action could be coordinated with other countries that hold strategic reserves, as was done with other members of the International Energy Agency after the disruption of Libyan crude supplies in 2011,” the report notes.

Then, comes the “endgame” prospects, according to the CRS report: A possibility of renewing negotiations, with the participation of the United States, and reaching yet another nuclear deal. The CRS outline puts it as follows:

Iran’s threats suggest to many experts that international and multilateral sanctions — and the prospect of additional sanctions — have begun to affect its political and strategic calculations. The threats have been coupled with a publicly announced agreement by Iran to resume talks with six countries on measures that would assure the international community that Iran’s nuclear program is used for purely peaceful purposes. Some experts believe that the pressure on Iran’s economy, and its agreement to renewed talks, provide the best opportunity in at least two years to reach agreement with Iran on curbing its nuclear program.

And the conclusion? The CRS says directly that “Concerns about broadening international sanctions on Iran’s oil exports prompted some Iranian officials to make threatening statements about closing the Strait of Hormuz. Iran has invested in the military capability to close or disrupt traffic through the Strait. If Iran attempted to do so, the United States — which has invested in military preparedness to keep the Strait open — would respond, potentially joined by other countries. Such a military response may or may not be limited to simply reopening the Strait for transit”.

The report continues, “The threat of military response, coupled with its economic concern about disrupting commerce with its own trading partners, makes Iran unlikely to attempt to close the Strait of Hormuz. Iran has the option of harassing tanker traffic through the Gulf as it has in the past, though that also runs the risk of military retaliation and alienating customers. However, it is possible that Iranian action becomes relatively more likely as more countries reduce or refuse Iranian exports. Alternatively, Iran may choose to continue making threatening statements without actually acting and/or to seek a diplomatic solution to curb oil sanctions through renewing international talks on its nuclear program. A disruption of oil exports through the Strait would have significant impacts on oil prices around the world. To some degree a disruption could be offset by release from the U.S. Strategic Petroleum Reserve and similar reserves in other countries. Even without an extant disruption, concerns about a future disruption may also contribute to oil prices being higher than they might otherwise be by creating uncertainty about a large portion of the world’s oil supply. Iran has the option of making threatening statements about the Strait without actually acting, which is what it has been doing since December 2011. So long as oil market participants consider this a credible future threat, it could contribute to upward pressure on oil prices,” the CRS reportadds.