Tension is being retched upon Iran by USA with the aim of discouraging its nuclear programme claimed to be peaceful by the Iranian government. And now the principal European and Asian countries have boycotted the import of Iranian oil. The whole idea of the sanctions against Iranian central bank and its oil export sector started off from the Israeli government. And, now it is not less than a nightmare for the international oil market as Iran, wrought by the escalation of Western sanctions, is attempting to block the flow of oil through the Strait of Hormuz. The strategic importance of the strait is not over emphasised as Strait of Hormuz is the worlds most important oil transit. According to a recent report by IAEA, almost 17 million bpd of oil flows through the strait which is about one-fifth of world oil trade exiting the Persian Gulf. Closure of the strait would require longer alternate routes or overland pipelines. The Western attempts significantly aimed at black listing all those countries that continue to work closely with Iranian central bank for oil import payments. Hence, the objective is clearly to cut off imports of Iranian oil which contributes to almost 80 percent of Irans revenues. EU diplomats have also extended hands in agreement to the US to reduce its Iranian oil imports to minimum which, although not insignificant, is not enough to make Iran suffer in its oil export revenues. Moreover, there are chances for Iran to take advantage of higher oil prices given the fact that there are little or no other compensatory oil inventories at the global markets arm stretch. However, Iran faces prospects of major cutbacks in its oil sales to China, its biggest trade partner and Japan, as these countries claim to strive for energy security by construction of more oil supplies in case of US-Iran armed conflict. With China and Japan cutting their purchases, Iranian exports will suffer a major blow of 2.6 million bpd, half of Irans total exports. United States is considering Irans threat as an answer to the punitive sanctions by US and allies amid the countrys own economic weakening and inflationary pressures. On the other hand, Iranians are confused as to why Washington is seeking to provoke Iran at a time of economic crisis in United States when it knows that this would eventually lead to a surge in the oil prices!? It now rests on the fact whether it is possible to have a major impact on Iranian export of oil without causing a great deal of inflation of oil prices worldwide. By no means will US be able to push away the higher energy costs that would affect the economic balance especially during harsh winters. Continuing tension and a strike by US as predicted by the Russia will lead to explosive consequences throughout the region. US must remember that the significant Shia minorities in the Gulf, Bahrain, UAE and Qatar might be incited and the world would see a close down of the oil line and a huge increase in oil and natural gas prices. Already crude Brent has witnessed a 4 percent rise to $112.13, the highest since mid-November. The Iranian rial has tumbled against dollar by 12 percent in the meanwhile. Besides, a strike would mean a rise in the death toll of US troops in the region if Iran notifies its cells in Iraq, Afghanistan and the Gulf. The Obama Administration should not look for another war, at least this close to the elections.
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