Iran ships oil to China via the Strait. It needs the oil revenue.
the rest is noise.
It won’t close.
“Closing the Strait of Hormuz is very easy for Iranian naval forces,” Iran’s navy chief Habibollah Sayyari told state-run propaganda channel Press TV. “Iran has comprehensive control over the strategic waterway.” His comments followed similar words from Vice President Reza Rohimi yesterday, and an announcement a few weeks ago that the Iranian navy would be conducting military exercises to simulate shutting the Strait of Hormuz, through which 40 percent of world’s sea-borne oil passes.
During the so-called Tanker War between the Iranians and Iraqis during the 1980s, shipping in the Strait was severely threatened by both sides. Both countries sought to deprive the other of oil revenue, and attacked the boats of neutral parties as well as their direct enemies. All of that drove up the price of oil and shipping insurance, but didn’t ever close the Strait of Hormuz. Eventually, the US Navy began escorting ships through the Strait, concerned about the global price of oil.
October 1987 US warships destroy an Iranian oil platform after an Iranian missile injures 18 crew on a US oil tanker.
April 1988 US forces destroy two more offshore installations after 10 sailors on a US frigate are injured in a mine explosion. Washington alleges the oil platforms are being used to launch attacks on shipping in the Gulf. Iran denies the claim.
In retaliation for the mining of a US warship on April 14, which Washington blamed on Tehran, the US navy fights a one-day battle against Iranian forces in and around the strait. The Americans sink two Iranian warships and as many as six armed speedboats in the engagement, which is regarded at the time as the largest confrontation between surface fleets since the second world war.
July 1988 A US warship patrolling the Gulf shoots down a civilian Iranian airbus, killing almost 300 people. Washington claims the crew mistook the airliner for an Iranian F-14 fighter but has never apologised for the incident.
March 2007 Iran’s republican guards seize 15 UK naval personnel in the Gulf at gunpoint as they return to HMS Cornwall. The Royal Navy insists they had been inside Iraqi water when they were seized.
March 2007 The US navy sends two aircraft carriers and up to 100 jets to the Gulf in its most extensive military manoeuvres since the 2003 Iraq invasion.
September 2007 The US military says Iran has built a high-tech spy post in the Gulf on the remains of a crane platform, to track the movement of western naval forces and commercial shipping.
On Jan. 12, 2012, The New York Times reported that the Obama administration was relying on a secret channel of communication to warn Iran’s supreme leader, Ayatollah Ali Khamenei, that closing the strait was a “red line” that would provoke an American response, according to U.S. government officials.
Gen. Martin E. Dempsey, the chairman of the Joint Chiefs of Staff, said that the U.S. would “take action and reopen the strait,” which could be accomplished only by military means, including minesweepers, warship escorts and potentially airstrikes. Defense Secretary Leon E. Panetta told troops in Texas on Jan. 12 that the U.S. would not tolerate Iran’s closing of the strait.
Iran’s own shaky economy relies on exporting at least two million barrels of oil a day through the strait. A blockade would also punish China, Iran’s most important oil customer and a major recipient of Persian Gulf oil. China has invested heavily in Iranian oil fields and has opposed Western efforts to sanction Iran over its nuclear program.
Outright Closure. An outright closure of the Strait of Hormuz, a major artery of the global oil market, would be 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 if few or no countries were willing to import its oil.
• Harassment and/or Infrastructure Damage. 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.