Iran navy vessels and submarines take part in a navy parade during the exercises in the Oman Sea near the Strait of Hormuz in this Jan. 3 photo. As the West increases sanctions against Iran, the latter responds by rising the tension in the crucial strait. REUTERS photo
An Oil Strategy In Case Iran’s Navy Shuts Down The Strait of Hormuz: View -- Bloomberg editorial
Let’s just say Iran makes good on its recent threats to shut down the Strait of Hormuz. And let’s say that with one-fifth of the world’s oil supply bottled up, the price of a barrel of oil then almost doubles, as some analysts predict, to more than $200.
What can the world do to bring prices down before a still- woozy global economy gets pushed back into recession?
Pipelines that circumvent the strait could carry to market at least 7 million of the 17 million barrels of tanker-borne oil that passes through the strait each day. The U.S. could, for the first time since the Gulf War in 1991, release oil from its 700 million-barrel Strategic Petroleum Reserve; other members of the International Energy Agency (set up after the 1973-74 oil crisis) could also tap the 90-day supply stocks that they are required to maintain.
Read more ....
My Comment: On the political and military front, war against Iran will be the outcome from such a shut-down .... but for oil supplies, alternative supplies will be used (i.e. emergency supplies from stockpiles), higher prices will dampen demand, and .... the worse case .... rationing of the type that happened during the 1973 oil embargo and the 1979 Iranian revolution.
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