Barack Obama held an town hall meeting in Dayton recently speaking about a "secure energy future." During the meeting, he made the following statement:
If Iran decided to shut down the petroleum-rich Strait of Hormuz tomorrow, they believe oil would skyrocket to $300-a-barrel in minutes, a price that one speculator predicted would result in $12-a-gallon gas. $12 a gallon.
While "one speculator" may have predicted this, it needs to be looked at in perspective. For starters, of the eighty-six million barrels of oil produced per day, Iran produces merely four of those - 4.6%. However, the Strait of Hormuz, relatively small at a length of 26 miles, has 25% of the world's oil supply pass through it. In itself, this poses a major problem, should Iran shut down this area.
However, Iran simply doesn't have the power, militarily speaking, to do this, and would have many other countries outside of the US breathing down their neck should this happen. In fact, the United States is on the record saying they will not let this happen. Vice-Admiral Kevin Cosgriff, the commander of the U.S. Navy's Fifth Fleet had the following to say regarding the Strait of Hormuz:
Iran will not attempt to close the Strait of Hormuz and we will not allow them to close the Strait of Hormuz. I can't say it anymore clearly than that.
Like the earlier story about Iran's photoshopping issues, this is simply Iran, and Ahmadinejad trying to flex their muscle on a global level. Unfortunately for Iran, like the earlier story, it is simply smoke and mirrors. Iran at the worst could take four million barrels of oil off the market. At best, they would be smart to take no action, for I believe if they were to try to impose their will upon the Strait of Hormuz, it would lead not only the United States, but other allied nations to hostilities with Iran - A battle the Iranians cannot win.
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