December 29, 2011 in Nation/World

U.S. warns Iran against closing key oil route

Threats reflect fear of new sanctions
Ali Akbar Dareini Associated Press
 

TEHRAN, Iran – The U.S. strongly warned Iran on Wednesday against closing a vital Persian Gulf waterway that carries one-sixth of the world’s oil supply, after Iran threatened to choke off traffic through the Strait of Hormuz if Washington imposes sanctions targeting the country’s crude exports.

The increasingly heated exchange raises new tensions in a standoff that has the potential to spark military reprisals and spike oil prices to levels that could batter an already fragile global economy.

Iran’s navy chief said Wednesday that it would be “very easy” for his country’s forces to close the strategic Strait of Hormuz, the passage at the mouth of the Persian Gulf through which about 15 million barrels of oil pass daily. It was the second such warning by Iran in two days, reflecting Tehran’s concern that the West is about to impose new sanctions that could hit the country’s biggest source of revenue, oil.

“Iran has comprehensive control over the strategic waterway,” Adm. Habibollah Sayyari told state-run Press TV, as the country was in the midst of a 10-day military drill near the strategic waterway.

The comments drew a quick response from the U.S.

“This is not just an important issue for security and stability in the region, but is an economic lifeline for countries in the Gulf, to include Iran,” Pentagon press secretary George Little said. “Interference with the transit or passage of vessels through the Strait of Hormuz will not be tolerated.”

Separately, Bahrain-based U.S. Navy 5th Fleet spokeswoman Lt. Rebecca Rebarich said the Navy is “always ready to counter malevolent actions to ensure freedom of navigation.”

Rebarich declined to say whether the U.S. force had adjusted its presence or readiness in the Gulf in response to Iran’s comments, but said the Navy “maintains a robust presence in the region to deter or counter destabilizing activities, while safeguarding the region’s vital links to the international community.”

Iran’s threat to seal off the Gulf, surrounded by oil-rich Gulf states, reflects its concerns over the prospect that the Obama administration will impose sanctions over its nuclear program that would severely hit its biggest revenue source. Iran is the world’s fourth-largest oil producer, pumping about 4 million barrels a day.

Gulf Arab nations appeared ready to at least ease market tensions. A senior Saudi Arabian oil official told the Associated Press that Gulf Arab nations are ready to step in to offset any potential loss of exports from Iran.

Saudi Arabia, which has been producing about 10 million barrels per day, has an overall production capacity of over 12 million barrels per day and is widely seen as the only OPEC member with sufficient spare capacity to offset major shortages.

What remains unclear is what routes the Gulf nations could take to move the oil to markets if Iran goes through with its threat.

About 15 million barrels per day pass through the Hormuz Strait, according to the U.S. Energy Information Administration.

There are some pipelines that could be tapped, but Gulf oil leaders, who met in Cairo on Dec. 24, declined to say whether they had discussed alternate routes or what they may be.

The Saudi official’s comment, however, appeared to allay some concerns. The U.S. benchmark crude futures contract fell $1.98 by the close of trading Wednesday on the New York Mercantile Exchange, but still hovered just below $100 per barrel.

U.S. State Department spokesman Mark Toner played down the Iranian threats as “rhetoric,” saying, “we’ve seen these kinds of comments before.”

While the Obama administration has warned Iran that it would not tolerate attempts to disrupt traffic through the Strait of Hormuz, U.S. officials do not see any indication that the situation will come to that. Nor do they believe that Iran, which is already under increasing pressure from sanctions, would risk disrupting the strait because doing so would further damage Iran’s own economy.

Instead, the administration believes Iran is playing the only card it has left: issuing threats and attempting to shift focus away from its own behavior.

U.S. officials have not said whether there is a concrete response plan in place should Iran seek to block the strait. But the administration has long said it is comfortable with the U.S. Naval presence in the region, indicating that the U.S. could respond rapidly if needed.

The White House has been largely silent on Iran’s threat, underscoring the administration’s belief that responding at the White House level would only encourage Iran.

© Copyright 2011 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.


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