I'm making this thread to make more people aware of the possible consequences that this whole child-play in the Straight of Hormuz can cause.
Often I see people here in ATS being a bit rude to other members discussing this things, labeling them as ignorant or even as plain stupid, or the
same old "war mongering" accusations. While I do think there are people with wrong concepts on both sides, people (especially from the West) tend to
undermine the reality of the whole issue with Iran, wether we are talking about military power, or the possible consequences of closing Hormuz.
Some have argued in the past that we could easily overcome this problem by going after other sources of oil. Saudi Arabia already stated they would
"happily" replace Iran when it comes to oil supply. Libya, who suffered a regime change that we all got to watch fairly closely, already stated that
their oil production would reach pre-conflict levels around June, making it a nearly perfect oil supplier for the actual countries that are going to
be affect by the oil sanctions towards Iran (Italy, France and Spain).
Libya is close enough for shipping to be safe between oil sources and costumers.
So, we already have 2 oil producing countries getting ready to replace Iran when oil sanctions come to effect.
Personally, I've had the impression that this would be sufficient. I even assumed this was all a major plan to isolate Iran further, both
diplomatically and economically. But the problem is far more complex, as this article from PressTV (quoting other sources, by the way) states:
"Bypassing Straight of Hormuz impossible", say energy experts
Peter Sand, a chief shipping analyst at The Baltic and International Maritime Council, told Dow Jones that the use of longer alternate routes to
carry oil shipments will increase transportation costs and cause oil to eventually reach the market at a time lag and in insufficient
quantities.
This is not a sign that oil prices would go through the roof. This also implicates that
a lot of the oil supply that is dependent on Iran could
actually come to a nearly stand still, since ships carrying oil would take more time and be further between shipments than what the world has been
"programmed" to assume, even with oil price speculations.
Implications? Industry and transports would be the most affected. As far as I'm aware, energy-focused oil supply has obviously a higher priority than
industry and transport, so I think we can assume that it can be resumed even if this gets worst.
But most industries that need oil to produce their products (from plastic to rubber to other oil derivative products, which are present everywhere)
would come to a near stop as they wait for their crude imports to arrive. We are not only looking at major economic losses, but also huge productions
implications and stock problems. Lots of products would simply run out of the shelfs because we can't produce enough to replace the need.
And let's not forget transport. Most people assume that with this, they would simply resort to walking or using public transport. But when experts
mention transport, they are not only talking about civilian cars. Trucks, trains, ships, everyone would be dependent on single ships arrivals to
refuel and transport their cargo.
That translates to a even more serious standing still in industry. It's not only the prime-matter of the industry that isn't arriving, the ones
carrying it would also stop.
According to the Dow Jones, the Strait of Hormuz is currently being used by OPEC members Kuwait, Iran, Iraq, Qatar, Saudi Arabia and the UAE to
export crude oil.
So basicly, it's not only a strike to western economy, it's also a strike against the countries who profit from selling oil to the west.
All the countries above quoted are allied, cooperative or at least controlled by the U.S., by the way.
The US Energy Information Administration recently reported that about 70 million metric tons of liquefied natural gas has passed through the
Strait in January-October 2011.
Paul Domjan, advisor to Securing America’s Future Energy (SAFE), an organization committed to combating US oil dependence, says “most oil that
could realistically be diverted through pipelines is 4.5 to 5 million gbpd even in the best-case scenario.”
When you see numbers like 70 million coming down to
4 to 5 million gas barrels per day, it's time to get concerned. Especially since he
mentions using
existing alternative routes in case of the Straight is closed.
Experts at Barclays Capital financial institution note that although alternative routes for crude exist, “they are limited in capacity (and) in
many cases aren’t currently operating or operable, and generally engender higher transport costs and logistical challenges.”
One possible alternative is to use export terminal at the Red Sea port at Yanbu, where a pipeline carrying the Iraqi oil terminates, SAFE’s Domjan
said.
He added, “From there crude would either move through the congested Suez Canal…or through the Gulf of Aden, which would be putting 2 million
barrels of oil through the most pirate-infested part of Africa, the costs of protecting it would be massive.”
So, there aren't only few options to overcome the problem, but to actually shift the oil flow to those alternatives would mean a whole re-structuring
of the oil flow system, causing billions in loss of profit across the globe.
Can you imagine pirates getting hold of oil super-tankers? They wouldn't even care to take hostages. The oil alone is enough of a reward, if they can
transport it or sell it.
The remaining pipeline options, according to experts, are either deactivated, such as the Iraq-Turkey pipeline to the Mediterranean port of
Ceyhan, or still hypothetical in the case of the Abu Dhabi pipeline.
Not very optimistic.
And for those who claim Iran would suffer the most with the closing of the Straight, here is your cherry on top of the cake:
“Coincidentally, the (only) oil exporting country that is in the best position to bypass the Strait of Hormuz is Iran, which has a pipeline
network in place to enable the theoretical pumping of crude north to the Caspian Sea, from where there are plenty of options to export,” Domjan
said.
So, Iran not only has the power to close the Straight, if they make a serious enough effort, but they also have alternatives in terms of economic
consequences. And who would have guessed, those alternatives are Russia and possibly China.............
Be careful for what you wish for, and start waking up people.