Happy New Year everyone! I should be back on a regular posting schedule in about two weeks, and should have a new episode of R-Squared Energy TV up next week. For now, I offer the following timely guest post from OilPrice.com.
Since 24 December the Iranian Navy has been holding its ten-day Velayat 90 naval exercises, covering an area in the Arabian Sea stretching from east of the Strait of Hormuz entrance to the Persian Gulf to the Gulf of Aden. The day the maneuvers opened Iranian Navy Commander Rear Admiral Habibollah Sayyari told a press conference that the exercises were intended to show “Iran’s military prowess and defense capabilities in international waters, convey a message of peace and friendship to regional countries, and test the newest military equipment.” The exercise is Iran’s first naval training drill since May 2010, when the country held its Velayat 89 naval maneuvers in the same area. Velayat 90 is the largest naval exercise the country has ever held.
In light of Iran’s recent capture of an advanced CIA RQ-170 Sentinel drone earlier this month, Iranian Navy Rear Admiral Seyed Mahmoud Moussavi noted that the Iranian Velayat 90 forces also conducted electronic warfare tests, using modern Iranian-made electronic jamming equipment to disrupt enemy radar and contact systems. Further tweaking Uncle Sam’s nose, Moussavi added that Iranian Navy drones involved in Velayat 90 conducted successful patrolling and surveillance operations.
Thousands of miles to the west, adding oil to the fire, President Obama is preparing to sign legislation that, if fully enforced, could impose harsh penalties on all customers for Iranian oil, with the explicit aim of severely impeding Iran’s ability to sell it.
How serious are the Iranians about the proposed sanctions and possible attack over its civilian nuclear program and what can they deploy if push comes to shove? According to the International Institute for Strategic Studies’ The Military Balance 2011, Iran has 23 submarines, 100+ “coastal and combat” patrol craft, 5 mine warfare and anti-mine craft, 13 amphibious landing vessels and 26 “logistics and support” ships. Add to that the fact that Iran has emphasized that it has developed indigenous “asymmetrical warfare” naval doctrines, and it is anything but clear what form Iran’s naval response to sanctions or attack could take. The only certainty is that it is unlikely to resemble anything taught at the U.S. Naval Academy.
There are dim lights at the end of the seemingly darker and darker tunnel. The proposed sanctions legislation allows Obama to waive sanctions if they cause the price of oil to rise or threaten national security.
Furthermore, there is the wild card of Iran’s oil customers, the most prominent of which is China, which would hardly be inclined to go along with increased sanctions.
But one thing should be clear in Washington – however odious the U.S. government might find Iran’s mullahcracy, it is most unlikely to cave in to either economic or military intimidation that would threaten the nation’s existence, and if backed up against the wall with no way out, would just as likely go for broke and use every weapon at its disposal to defend itself. Given their evident cyber abilities in hacking the RQ-170 Sentinel drone and their announcement of an indigenous naval doctrine, a “cakewalk” victory with “mission accomplished” declared within a few short weeks seems anything but assured, particularly as it would extend the military arc of crisis from Iraq through Iran to Afghanistan, a potential shambolic military quagmire beyond Washington’s, NATO’s and Tel Aviv’s resources to quell.
It is worth remembering that chess was played in Sassanid Iran 1,400 years ago, where it was known as “chatrang.” What is occurring now off the Persian Gulf is a diplomatic and military game of chess, with global implications.
Washington’s concept of squeezing a country’s government by interfering with its energy policies has a dolorous history seven decades old.
When Japan invaded Vichy French-ruled southern Indo-China in July 1941 the U.S. demanded Japan withdraw. In addition, on 1 August the U.S., Japan’s biggest oil supplier at the time, imposed an oil embargo on the country.
Pearl Harbor occurred less than four months later.
It’s starting to become apparent that some clique within the Iranian government wants to start a war with the US. What else could explain the bomb plot against the Saudi Ambassador to Washington? The intent was to bomb the restaurant the Ambassador attended regularly, as well as several embassies in D.C. If successful, casualties would have been in the hundreds. Obama would have had little choice in how to respond.
The regime in Tehran is under such pressure that hardliners may think the only way to rally the nation behind them is through a war with the “Great Satan”. That’s scary as hell, because we’d win any war, but Iran could cause a great amount of destruction nonetheless.
It’s interesting that this article has completely ignored the fact that the European Union is also on the path for tighter sanctions and an oil embargo against Iran.
Well, it does seem like we are the ones rattling sabers with Iran just now.
I had hoped that by the time my teen-aged son became an adult that we would no longer be entangled in a war. It has always been one of my greatest fears as a parent to see him go off to war.
I guess “perma-war” has become the stance of the US foreign policy-military establishment.
The federal foreign policy and military bureaucracies shrank after wars, and indeed shrank rapidly after WWII.
Then came the long Cold War with the Soviet Union—and federal bureaucracies learned how long-term wars were great for business, their business. A huge apparatus was set up that thrives to this day—even after the collapse of the Soviet Union.
Now we have the GWOT, and endless and incredibly expensive ($4 trillion and counting) undertaking with the goal of eliminating every terrorist on the globe—in other words, a perma-war.
No doubt Iran is truculent, and run by half-wits, but on the other hand we have warships steaming on their shores, and installed a puppet government in the nation next to them (Iraq). That might make anybody truculent.
Oddly enough, we might be hurting only ourselves with this “strategy.” If Iran was not a pariah nation, it might have developed its vast oil and gas fields, resulting in softer global oil and gas markets—and a higher standard of living in Iran, perhaps making for a more secular government.
Isolating Cuba for 60 years has not worked—what if instead we had relations with Cuba, and vacationed there, and welcomed Cubans here into our schools, baseball teams, trade relations, oil development, etc. Would not Cuba have Americanized?
Will isolating Iran work, or just radicalize them?
Let’s hope no one get killed.
I think that’s a hope all parents share. Unfortunately, our history does not yield many decades without a war, so it is perhaps wishful thinking.
I’m no sailor, but that’s a big insult to the Naval Academy. I suspect the opposite is true: there is very little that can happen that the Naval Academy hasn’t considered. Nothing is foolproof, but the US military spends a lot of time think about who might do what and how.
BS. Such a response would make Iran the first suicidal state in history. This is not Al Qaeda, it’s a government. Brave statements notwithstanding, I don’t see them starting a shooting match with the US Navy.
Time for Obama to man up? Here I’d agree with the pessimists. Or maybe we’ll see another release from the SPR?
What a load of hogwash! Closing the Strait of Hormuz is not a defensive act: it would be an act of unprecedented aggression. There is a big difference between the two.
Also: what makes sanctions as effective as they are (and there’s an entire debate to be had to that topic) is that it is not a deed of aggression – the victim cannot reasonably respond with military aggression.
The economic impact of sanctions can slowly errode the will of a people. The mullahs may not be affected. Their ability to do anything dangerous may disappear, just like Saddam’s WMD.
The end result of which was Nagasaki and Hiroshima. The Iranians will be aware of that, even if the author of the article appears not to be.
I’m thinking trimming their ability to sell oil will be highly effective. Assuming the unbrave Mr. Obama is prepared to deal with $200/bbl.
As a parent myself, I understand the fear. The expectation is unrealistic, nonetheless. The best a parent could hope for would be a temporary period of peace, as far as your homeland is concerned.
When it comes to renewable fuel, I’m beginning to think the military-industrial complex will save us from Washington’s silly policies. We’ll see.
Iran is a society of well-educated, normal people. Their misfortune is to be led by a bunch of religious, fundamentalist whack-jobs.
But though they are whack-jobs, they are not crazy and irrational, and I suspect they know well what would happen to Iran should they close the Straights of Hormuz.
They have to know it would unleash a chain-of-events involving Western Europe, the US, and Israel, over which the Iranians would have no control, and whose unintended consequences would only have an adverse outcome for Persia.
My guess is the Iranian leadership will come to their senses.
NOPE!!! Saudis will help by increasing production to make up, besides, that would bring the world economy to it’s knees and possibly collapse.
Yes, there is a the Sunnit/Shi’a element which for most Americans adds an element of incomprehensibility and unpredictability. But I still think, Persions are essentially rational thinkers. Their country has a long and disguised history and despite what most of us see in the media, is cultured.
I’ll further add that the the Iranians also must move most of the oil China buys from them though the Straits of Hormuz providing much needed revenue for Iran.
I’n sure the Iranians are intelligent and pragmatic to realize that if they block the movement of oil to Western Europe through the Straits, that US and Western European naval forces will also stop the movement of Iranian oil.
Iran would not want that — their current stance is nothing but bluster.
As crippling and painful as it may be, I would welcome a steady increase to $200/bbl oil. In my opinion, it’s the only way to transition the American people and world away from petroleum. Sadly, the only way to get the majority of people to change, is to hit them in the pocket book.
To further Wendall’s point, here is a map of where Iran has it oil in addition to it’s refineries. The major port of Bandar Abbas is just west of the Strait of Hormuz and it is by far the farthest east major port. Basically, a blockade of Hormuz would hurt Iran just as much, if not more, than everyone else.
China has already cut Iranian oil imports by half. They want steep discounts on the 250k bpd they’re still buying. Europe is going to cut another 500k bpd. Japan is considering halving their 250k bpd as well. Iran may well see its oil exports cut by half, with the remaining half selling far below market value.
The world did okay without Libyan exports, so it will probably get by without 1.3m bpd of Iranian crude. BUT, this is going to put a world of hurt on Iran. The Rial has tumbled 40% in the last few weeks. Imagine the pressure Obama would be under if imports cost 40% more in such a short time. Talk about sticker shock at Walmart. I wouldn’t put anything past Iran’s leaders at this point.
I fail to see the logic, Perry!
First you say the world has already cut 1.3 m bpd of Iranian crude from the markets, essentially with no effect on price (for the buyers). Next you pull a 40% increase out of thin air. What did I miss?
As crippling and painful as it may be, I would welcome a steady increase to $200/bbl oil.
I agree. I also think it is already happening.
The 40% increase was in the price of imports to Iran Optimist. That’s because the value of the Iranian currency has fallen 40%. The only country to cut Iranian oil imports so far is China. But, the EU just voted for the sanctions, and will soon buy their 500k bpd elsewhere, probably from KSA. Under these sanctions, any country that DOESN’T cut their Iranian oil imports will be hurt financially. These sanctions have teeth, and Iran is already suffering the effects. With Parliament elections just two months away, the Arab Spring could be coming to Tehran. Under these circumstances, the last thing we should expect from the ruling mullahs is rational thinking.
Jan 3 (Reuters) – The Iranian rial fell to a record low against the dollar on Tuesday following U.S. President Barack Obama signing a bill on imposing fresh sanctions against the country’s central bank.
In my opinion, it’s the only way to transition the American people and world away from petroleum.
You need to expand your horizons. Think methanol and passage of the Open Fuels Standard Act. The corn ethanol boys would fight it tooth and nail, but methanol and its derivatives such as methanol fuel cells and DME for ignition compression engines are our motor fuels of the future.
Couple of things: interesting that the Europeans are willing to go along with sanctions, knowing that they will pay the price. I guess they didn’t get the memo that the end of cheap oil = the end of civilization.
Second, Iran is a complex country. They have elections, but candidates need to be “approved” by the mullahs. Hardly what one might call “free and fair elections” or democracy. The coming election does not mean the end of the mullahs, although another blatantly stolen election may make things real interesting.
I am convinced that war is an inherent human tendency. Throughout history we have fought one war after another. First it was for gold, now it is for oil. A war in the middle east is imminent. When that war will be ‘over’, there will be more wars.