EU oil ban jacks up Iran tensions

The Globe and Mail

British Foreign Secretary William Hague talks to the media during the European Union foreign ministers meeting in Brussels on Jan. 23, 2012. (Francois Lenoir/Reuters/Francois Lenoir/Reuters)

The European Union’s decision Monday to impose an oil ban and financial restrictions on Iran, echoing earlier moves by Washington, has propelled the West further along a collision course with Tehran, setting the stage for a potential summer showdown in the Strait of Hormuz.

The sanctions, aimed at containing Iran’s nuclear ambitions, will ratchet up over the course of several months to a peak in July. In a best-case scenario, they would trigger a denouement of tension before that, forcing the Islamic Republic to return to the negotiating table to resuscitate talks over its suspected nuclear projects.

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The worst case involves Iran interpreting the new censure as a declaration of war – something it has previously vowed to do – retaliating by attempting to close the Strait of Hormuz and sever the Gulf’s oil supply from the rest of the world.

Either way, the stakes in this simmering conflict have dramatically increased, reflected by fresh rhetoric on both sides.

In Iran, Mohammad Ismail Kowsari, deputy head of Iran’s powerful committee on national security, vowed the strait “would definitely be closed if the sale of Iranian oil is violated in any way.”

But in Brussels, British Foreign Secretary William Hague called the embargo part of “an unprecedented set of sanctions” and said they demonstrate “the resolve of the European Union on this issue.”

Despite the war of words, tanker traffic through the Strait of Hormuz has so far been uninterrupted. On the weekend, a U.S. naval flotilla, accompanied by British and French warships, navigated the narrow waters unchallenged.

However, with the United States already massing troops in the region and the Iranian Revolutionary Guard Corps promising to conduct new naval war games next month, this calm could prove short-lived.

There is general agreement among analysts on how the situation could play out. If Iran proves successful in closing the strait, it would impact world crude-oil supplies although other Persian Gulf countries, such as Saudi Arabia, have signalled a willingness to step up production to fill the gap.

Inside Iran, sanctions also would likely prove disastrous for the regime. The EU currently buys about one-fifth of Iranian oil exports, just behind China, its biggest customer.

Simon Henderson, director of the Washington Institute’s Gulf and energy policy program, believes that could trigger public protest. “We will have to see whether people take to the streets,” he said.

If war were to break out, military observers say, there is also no doubt Iran would be drastically outgunned. The U.S. Fifth Fleet, which is stationed in Bahrain and will soon boast two aircraft carriers, dwarfs the capacity of the Iranian navy, which consists of mostly smaller vessels equipped with anti-ship missiles and a fleet of mini-submarines.

But views vary as to whether those threats will prove enough for the Islamic Republic to return to the negotiating table and disclose its nuclear program, since years of sanctions have failed to stymie Iran from pursuing policies the rest of the world finds problematic.

“Will new threats be enough to influence the government in Tehran? We don’t know that, and really that’s the only question that matters,” Mr. Henderson said.