What Is The Plan If Oil Supplies Are Shut Off From The Persian Gulf?

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.

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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.

Iran Will Shut Down Shipping In The Persian Gulf If Attacked

ABOARD USS NIMITZ (Dec 15, 1997)--The guided missile cruiser USS Port Royal (CG 73) (left), and the nuclear powered submarine USS Annapolis (SSN 760) steam in formation with the nuclear powered aircraft carrier USS Nimitz (CVN 68). The Nimitz battle group is currently deployed to the North Persian Gulf in support of Operation Southern Watch. U.S. Navy photo by PhotographerÕs Mate 2nd Class Matthew J. Magee

Attack On Iran Could Risk Gulf Oil Supplies -- Washington Times

Powerful option if Israel hits nukes.

Iran is contemplating violently shutting down shipping in the Persian Gulf as one of several counterattack options if Israel strikes its nuclear facilities, regional and intelligence analysts say.

Such attacks would present the Obama administration with the option of undertaking a limited war against Iran by striking its warships and shore-based anti-ship missiles to keep the Gulf open for business.

Former CIA analyst Larry C. Johnson said Iran has enough firepower to effectively close the Gulf and Strait of Hormuz, through which 40 percent of all the world’s oil moves.

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My Comment: Iranians lawmakers are now coming out and saying bluntly that they will shut down the Persian Gulf by stopping oil shipments.

Major Oil Supplies Threatened In Caucasus War

A map tracing the route of the Baku-Tbilisi-Ceyhan (BTC) pipeline which runs through Turkey, Georgia and Azerbaijan. Azerbaijan has halted oil exports via the Georgian ports of Batumi and Kulevi due to clashes between Russia and Georgia, the head of the state oil company said Saturday. (AFP/Graphic/Laurence Saubadu)

Georgia: Russia targets key oil pipeline with over 50 missiles
-- The Telegraph

Russian jets targeted a key oil pipeline with over 50 missiles in a weekend bombing raid in Georgia that raised fears the conflict will tighten Moscow's stranglehold on Europe's energy supplies.

Deep craters pockmark the landscape south of the Georgian capital Tblisi in a Y-shaped pattern straddling the British-operated pipeline.

The attack left two deep holes less than 100 yards either side of a pressure vent on the pipeline. Shrapnel of highly engineered munitions litters the area.

There was no visible damage to the pipeline. Its vulnerability is summed up by a yellow hazard sign next to the vent warning against digging in the area. Anyone venturing on to the site is warned against smoking.

Local police recorded 51 strikes. "I have no doubt they wanted to target the pipeline, there is nothing else here," said Giorgi Abrahamisvili, a policeman who witnessed the attack.

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More News On Attacks On Oil Pipelines In Georgia

Azerbaijan halts oil exports via Georgia ports: state oil firm -- AFP
Russia says no plans to block Georgia oil port -- Reuters
Georgia: Russia targets key oil pipeline with over 50 missiles -- Telegraph
Georgia: Oil pipelines at risk -- Telegraph
Western Concern Grows Over Oil, Gas Pipes Through Georgia -- CNN
BP Operations Continue Amid Georgian Fighting, Pipeline Fire -- Bloomberg
Blow to hopes of oil pipeline security -- Financial Times
BP unaware of pipeline bombing in Georgia -- AFP
Russian jets targeted major oil pipeline: Georgia -- Reuters
Russia Continues to Pound Georgia-- Target Oil Pipeline -- Gateway Pundit

My Comment: If the reports from The Telegraph are true, targeting Western security interests and economic assets is a major escalation in this war. The implications on oil markets and prices will also be severe. Blow-back against Russian diplomatic interests will start to occur immediately from numerous countries. I cannot imagine higher oil prices caused by Russian military actions will make China, India, Japan, Europe, Turkey, and the U.S. happy observers.