Re: Oil at $250 a barrel? As the article itself suggests, Iran shutting down Strait of Hormuz because of oil sanctions is a low probability event. But if it does, yeah, Oil could hit $XXX per barrel because a significant percentage of Gulf's crude oil exports passes through the Strait of Hormuz.
Iran can achieve closure of Strait of Hormuz in two ways:
1) Deploying sea mines (will take a long time to clear)
2) Using a swarm of boats to attack crude oil tankers (basically guerrilla tactics). Iran literally has thousands of small attack boats like these -
Since strait of hormuz is just 40 km wide at some places, it is almost impossible for American Navy to defend the crude oil tankers.
However, there is a reason why Iran is unlikely to take such an extreme step because of oil sanctions - because the threat & ability to enforce Stait's closure is an insurance policy against American or Israeli attack on Iranian nuclear or military facilities. Ever wonder why Israel or United States has never attacked Iran? Ever wonder why Iran messes around in Syria, Yemen etc with impunity? Because, they sort of know that they have this Brahmastra in their arsenal.
That's why closure of Strait of Hormuz because of oil sanctions (and hence oil touching $250 a barrel) is a low probability event. They will try to close the Strait of Hormuz only if they are attacked.
Last edited by SmartCat : 16th July 2018 at 18:26.
|