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Sea Transportation: Iran And The Hormuz Booby Trap
   Next Article → ATTRITION: Rescue CCATT
May 15, 2010: Within the past few weeks, Iran has conducted wargames simulating a blockade on the Strait of Hormuz. During these exercises Iran showcased both its maneuvers and green water fleet. Iran is clearly trying to send a message showing the consequences of a military strike on its facilities. However, even if Iran does possess the ability to block the Strait of Hormuz, it would be useless. With Hormuz closed, Iran would choke itself.

When one looks at a map of Iran, they notice that Iran borders seven countries: Pakistan, Afghanistan, Turkmenistan, Azerbaijan, Armenia, Turkey, and Iraq. IranÂ’s estimated combined trade with these countries is approximately $22.5 billion (IranÂ’s total exports total $70.16 billion and bilateral trade reaches $127.32 billion), approximately 32 percent of its exports. The rest of IranÂ’s trade, around $48 billion, occurs through shipping routes either through the Caspian Sea or the Persian Gulf. 

If Iran attempted to blockade the Strait of Hormuz, the US and NATO would likely respond with their own blockade. The U.S. possesses a superior fleet, so it would be highly unlikely for Iran to eliminate the U.S. fleet and its blockade. Immediately, all trade both ways through the Strait of Hormuz would be stopped.

Iran could never afford such an action. IranÂ’s largest ports, Kharg Island and Lavan Island (which both store and export oil) and Bandar Abbas (which imports and exports commercial and industrial goods), are all in the Persian Gulf. The only exit out of the Persian Gulf is through the Strait of Hormuz. This is where most of IranÂ’s trade flows; Iran has yet to establish significant trade routes in the Caspian Sea. 

Crude oil makes up 80 percent of IranÂ’s exports, approximately $56.13 billion. Since both of IranÂ’s largest oil export ports (Kharg Island and Lavan Island) are in the Strait of Hormuz, IranÂ’s exports would shrink drastically. Iran would be unable to ship oil. On top of that, IranÂ’s fleet of 29 supertankers would be confined to the inner Persian Gulf. These large ships, which contribute a significant amount to the Iranian economy, could not break the U.S. blockade.    

Even worse, the U.S. would likely pressure its allies in the Middle East to stop trading with Iran. Two countries that would likely cooperate (based on the U.S. troop presence in the country) would be Afghanistan and Iraq, which Iran exports a combined $4.5 billion worth of goods to. If the US offered incentives and gained the support of the UN, other nations (specifically the United Arab Emirates and Turkey) bordering Iran also might halt their trade. 

Iran has made several dangerous mistakes. Not only has it relied on one main resource for the majority of its exports, but it also has relied on only a few trade routes; Iran relies too much on the Strait of Hormuz. As a result, a blockade against the Strait of Hormuz, combined with cutting off some of the trade between Iran and its neighbors, would strike a devastating blow to IranÂ’s economy. The economic downturn in Iran would likely cause both internal strife and a decrease in military spending that would weaken IranÂ’s blockade. Blocking the Strait of Hormuz, which 40 percent of the worldÂ’s oil flows through, may seem like a solid strategy, but in fact it has several flaws. Hopefully Iran considers the economic consequences of closing the Strait of Hormuz. --By Bret Perry

 

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trenchsol       5/15/2010 11:18:32 AM
I don't know what plans US have, but I am pretty sure that they would never, under any circumstances, allow Persian Gulf to be blocked. I don't know what kind of treaties US have with Gulf allies, but it is likely that they (allied countries) would perceive such Iranian act as an aggression, and expect US to take some action.
 
I think that Iranian blockade of Persian Gulf would be an act of war, as much as Iraqi occupation of Kuwait was.
 
DG

 
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PeteRR       5/15/2010 12:08:51 PM
It's not just exports.  The gasoline Iran imports to keep it's civilian and military vehicles moving arrives through the Hormuz Straits.  
 
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Heorot       5/15/2010 5:15:37 PM
Does Iran not have its own refineries to produce its own gasoline?
 
I find that hard to believe.
 
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PeteRR       5/15/2010 7:51:07 PM

--Does Iran not have its own refineries to produce its own gasoline?

 

I find that hard to believe.--

Not enough to meet current demand.   

 

 
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Griffin63       5/16/2010 5:43:52 AM




--Does Iran not have its own refineries to produce its own gasoline?



 



I find that hard to believe.--




Not enough to meet current demand.   




 Their biggest and best refineries were damaged during the Iran-Iraq war in the 1980's and because of sanctions have never been repaired properly or replaced.





 
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huskerguy7       5/16/2010 7:43:54 PM
I looked at the locations the author mentioned, and those aren't refineries.  They're just literally places to store oil.
 
It's an interesting point showing even if Iran does somehow manage to cut off the flow of oil through the Gulf, they would kill themselves.  
 
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WarNerd       5/17/2010 9:00:01 PM

Does Iran not have its own refineries to produce its own gasoline?

I find that hard to believe.

No significant new capacity has been added since the fall of the Shah, and Iranian refineries lacks sufficient secondary processing such as hydrocracking to maximize gasoline production.  Most likely cause is a combination of sanctions, internal politics, and diversion theft of funds, which have also hampered maintenance.  The importation and distribution of petroleum products has become a major source of funding for the Revolutionary Guard.
 
On the demand side, the Iranian government was until recently been unwilling to relax price controls and allow fuel costs in increase because of fear of social unrest.  Below market costs allowed demand, especially for motor vehicles, to grow without constraint except for shortages, which also had to be minimized to prevent social unrest.  A couple years back this reached the point of unsustainability and the government started to both raised the price and severely limited the supplies of price controlled fuel.
 
The price controls have also destroyed any prospect for outside funding for refinery construction.  China is supposed to have made a deal with the central government for the construction of new oil refineries for gasoline production in return for the exclusive rights to the development and the production from several oil fields, but there are apparently some problems have arisen over operation and maintenance of the refineries (if they refineries do not produce the Chinese do not get to keep the oil fields) being controlled by the Chinese.
 
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