Friday, January 6, 2012

IRANIAN NAVY HEATING UP THE OIL MARKET

The media is at a frenzy over gas prices and the hype is growing about the race for the Republican nomination for President.  Have we overlooked the ring of fire in the Middle East?  Well, let's hope not.  Because it's heating up fast.

It is well known that the main passageway for oil exports in the world is the Strait of Hormuz in the Persian Gulf.  Intelligence reporting services such as Stratfor, continue to express growing tensions between the Iranian military and the U.S.  Iran continues to hold "war games" at the Strait of Hormuz effectively choking off free movement of naval vessels into and out of the Persian Gulf.  Also, the U.S. Fifth Fleet is located within the Persian Gulf, which puts the Iranian Navy between the base and open water.  Not exactly the right combination for smooth waters.  It is almost like Iran is coming between a dog and his bone.

Let us not forget, the U.S. Fifth Fleet has the firepower alone to sink Iran's navy into the murky waters of the Persian Gulf.  Probably a small carrier group could do it alone.  

The issue is tension and the result on the oil market.  The markets are reacting to what is and what could happen as a result of Iran raising tensions with the U.S.  They are considering the "what if" as well.  Should an all out engagement occur, the Strait of Hormuz could be blocked for perhaps months depending on the level of destruction and wreckage.  Not to mention the diplomatic fall out with the Arabian nations.  Domestically, oil market analysts project an all out conflict could result in $5 to $7 per gallon gas within 30 days of incident.

As we pull up to the local Exxon, slide our debit card and notice the price of gas on steady rise, let us be aware of such a possibility.  And, how an area in the Persian Gulf in which the U.S. only receives 14% of our oil, can trigger such a dramatic impact here in our own community.

2 comments:

  1. The U.S. Navy rescued a group of Iranian civilian sailors today in the Strait of Hormuz. They had been attacked by a pirate vessel. No direct conflict occurred from the Iranian Navy.

    ReplyDelete
  2. Unclassified intelligence report states Iran now possesses enough uranium to produce 2 nuclear warheads. Iran already has missiles capable of striking within 1,500 miles. At this distance, Iran could easily strike the U.S. Fifth Fleet base and Israel.

    ReplyDelete

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