With the EU agreeing a new round of sanctions on Iran – outlawing European oil and gas purchases from Iran in six months, freezing Iran’s Central Bank and banning trade in gold and other precious metals with any state-related bodies – tensions between Iran and the West are increasing. An Iranian MP has – again – warned that Iran will close the Strait of Hormuz and the US administration has – again – said that such an action will be countered. But what would happen if Iran carried out its threat?
Iran has noteworthy littoral warfare capabilities, including mines, anti-ship cruise missiles, and land-based air defence. If Iran uses these capabilities smartly, it could probably impede traffic in the Strait of Hormuz for some time: maybe days, maybe weeks. This would cut off a quarter of the world’s oil and thus send oil prices skyrocketing. Recession would follow. A closure would, however, also hurt Iran – something like 70 per cent of Iran’s budget revenues are generated by oil exports, all of which must transit the Strait.
US-led efforts to reopen the Strait would escalate rapidly into sustained, large-scale air and naval operations during which Iran could impose significant economic and military costs on the US and its forces.
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