In response to economic threats from the United States, Iran has threatened to close the Strait of Hormuz, a shipping route between the Arabian Gulf and the Gulf of Oman that is critical to the shipment of oil.
In May, President Trump withdrew the U.S. from the Iran nuclear deal (officially known as the Joint Comprehensive Plan of Action, or JCPOA). The Obama-era deal, signed by the U.S., the European Union, and the U.N. Security Council, had ended sanctions against Iran in exchange for the cessation of its nuclear weapons program. Trump asserted that the U.S. would reimpose sanctions by November 4 of this year.
The U.S. has expanded its pressure beyond Iran. According to Washington, if a country continues to buy Iranian oil after the November 4 deadline, it will also face sanctions from the U.S., without exception. Iranian President Hassan Rouhani dismissed the U.S. bluster, asserting that the U.S. does not understand what it is doing and would never be able to cut Iran’s exports. Although he did not mention the Strait of Hormuz explicitly, his statement has been widely interpreted as a clear threat that it would blockade this strategic and sole sea passage from the Persian Gulf to the open ocean. He said of Washington’s threatened embargo, “Do this if you can and see the consequences.”
Iran produces 2 percent of the world’s oil, around 3 million barrels per day, and relies on the strait for a significant portion of its foreign trade. The Strait of Hormuz is the world’s busiest transit point for oil, where 30 percent of all seaborne oil exports pass through its waters — 18.5 million barrels daily. The Strait, which is 55 kilometers wide at its narrowest, lies between Iran to the north and Oman to the south. Its two shipping lanes are only 3.2 kilometers wide each. This relatively tiny waterway is a weighty source of leverage in this political tug-of-war.
In addition potentially to closing the strait, some members of the Iranian parliament have introduced legislation to impose a moratorium on Iranian oil exports to countries that comply with the U.S.-imposed embargo. If the bill is approved by the parliament, Iran’s 12-person Council of Guardians, and Supreme Leader Ayatollah Ali Khamenei, this measure is still a relatively weak bargaining chip against the powerful U.S. sanctions.
Washington’s warnings to states that buy Iranian oil is complicated by the fact that many of America’s allies buy Iran’s oil, including the E.U., which is frantically trying to keep Iran in the JPCOA. Iran has, in essence, threatened to leave the deal if Europe cannot offer a package of economic measures that counterbalance American sanctions. This leaves European countries that buy Iranian oil with a weighty decision of whether to acquiesce to Washington’s demands or whether to continue their fragile effort to woo Iran. Of Iran’s biggest oil buyers, neither China, India, nor Turkey seems to have any intention of stopping its imports; Japan and South Korea are resistant, but want to appease the U.S.
Washington has also threatened foreign corporations, warning that any company doing business in Iran after November 4 will be blacklisted from doing business in the U.S. These warnings seem to be having an effect. France’s shipping giant CMA CGM, responsible for 11 percent of global shipping, much of which involves the U.S., plans to pull out of Iran. Another major shipper, A.P. Moller-Maersk, did the same in May. Other corporations have said they will pull out or cease planned operations in Iran. Conversely, others, like the French oil corporation Total SA, have unabashedly signed new contracts in Iran, essentially thumbing its nose at the Trump administration’s effort to act like a regulator of international business, to further American political interests.
Iran has threatened to close the Strait of Hormuz before, the closure to be enforced by Iran’s Revolutionary Guard, a politically powerful military force tasked with preventing foreign interference and controlling the Persian Gulf; the Guard reports directly to Supreme Leader Khamenei. These threats came during the Iran-Iraq war in the 1980s and in response to proposed E.U./U.S. sanctions in 2011. However, Iran never followed through on its threat.
While the Guard has prepared for such a closure, it is unclear whether or not it actually has the capability of entirely blocking the strait. Its fleet is limited, and mostly comprised of small, fast attack boats, compared to the U.S.’s imposing fleet of massive warships. However, Iran’s fleet has outmaneuvered both American and British naval forces in the past. Its blockade would be augmented by naval mines and land-based missiles. The Gulf has long been a stage for U.S.-Iran military tensions. In 1988, the U.S. sank Iran’s fleet after a Iranian mine damaged a U.S. ship. Also that year, a U.S. ship shot down a civilian flight from Iran to Dubai, killing nearly 300 people. In 2016, Iran detained, then released, U.S sailors that entered Iran’s waters.
The novelty of this threat is that it came from Rouhani himself, who has proved himself as a relatively moderate and action-oriented leader, capable of participating in constructive dialogue with Western powers. President Trump’s unilateral, hardline aggression against Iran is pushing Rouhani to respond in kind. Anti-U.S. hardliners in the Iranian government, with whom Rouhani has experienced mounting tension, may have appreciated Rouhani’s Hormuz threat. In some ways, the move could be seen as an attempt to ease domestic tensions. Hardline media outlets in Iran praised Rouhani. Revolutionary Guard Major-General Qassem Soleimani said, “this is the Dr. Rouhani whom we knew and know and who must be.” Other Guard officials, who are often critical of Rouhani, have proudly confirmed they will close the strait if called to do so. In this way, Iran’s hardliners mirror Trump in their penchant for bellicose, retaliatory politics and are pulling Rouhani into the fold. The Trump administration’s actions are weakening the political middle ground in both the U.S. and Iran.
Trump is pushing Tehran further away from the U.S., which in turn only serves to inflame the countries’ mutual antagonism and increase the likelihood of an armed conflict.
The U.S. military responded to the threat of closure by vowing to keep it open, “where international law allows.” If Iran follows through with an armed closure of the strait, there is little doubt that the U.S. will respond with force, given the Trump administration’s confrontational tendencies and hard-headed, jingoistic rhetoric.
Tehran recognizes the U.S. as posing a legitimate and substantial danger to its economic well-being and stability. Iran hopes that its allusion to a potential armed conflict will deter the U.S. from following through with its embargo. In light of President Trump’s strongman politics and the U.S.’s significant bargaining advantage, it is unlikely the U.S. will concede in any significant way.
Disrupting Hormuz could not only trigger armed conflict with the U.S., but could also damage Iran’s relations with its major oil customers. Iran exports 560,000 barrels of oil daily to China, 252,000 to South Korea, and 206,000 to Japan. Blocking oil exports through the strait would limit global supply and could potentially drive up global prices. This could engender political or economic retaliation. Although closing the strait would inevitably harm Iran, Tehran has assured the world that it would cut off the Persian Gulf to everyone if “the Persian Gulf becomes unusable for us.”
Other oil-producing Gulf states, namely the U.A.E., Saudi Arabia, and Qatar, unable to export much of their oil, would be hurt by the Strait’s closure. As a fallback, the U.A.E. could export about three quarters of its oil through a pipeline to the Arabian Sea, and Saudi Arabia could export about one third of its oil via a pipeline to the Red Sea. Qatar exports 3.7 million cubic feet of liquefied natural gas (LNG) – 30% of the world’s LNG – through the strait annually. If the strait is closed, its exports face major obstacles. Trump has reportedly spoken with Saudi Arabia’s King Salman, who agreed that his kingdom would boost oil production in order to counterbalance the embargo against its rival. American oil corporations are also likely to boost production.
In May, Secretary of State Mike Pompeo essentially called for Iran to capitulate to U.S. demands, a concept that is far from becoming reality. The chances are slim that Iran will agree to a new nuclear deal defined by American terms, given the countries’ past relations and growing power of strongly anti-U.S. political factions within Iran. Iran’s Oil Minister Bijan Zanganeh characterized the conflict as a trade war, with the U.S.’s goal being the wholesale paralysis of Iran’s economy. Iranian Vice President Eshaq Jahangiri suggested the Washington is, in part, hoping this economic offensive will result in popular unrest, protests, and even regime change. “It would be a mistake to think the U.S. economic war against Iran will have no impact,” he said.