The US remains adamant in its desire to cut Iran’s oil exports to zero, even if it hurts importing countries. America’s secondary sanctions on firms dealing with Iran would "snap back" on August 6 for trade in cars and metals and on November 4 for oil and banking transactions. The “wind down” period varied between 90 and 180 days is intended to allow entities to end businesses in Iran. There will be no waivers. India, China and Turkey are the oil importers expected not to succumb to US pressure.
Brian Hook, the State Department's director of policy and planning, said "Our goal is to increase pressure on the Iranian regime by reducing to zero its revenue from crude oil sales." The US has already approached Saudi Arabia on the subject of increasing exports to compensate for the reduction of Iranian oil on the world market.
The goal is to hit Iran’s economy against the background of ongoing protests inside the country. Last July, John Bolton openly called for regime change in Tehran. He was not national security adviser at the time but nothing makes believe he has changed his views since then.
Iran’s President Hassan Rouhani warned the United States about consequences. He said shipments from other countries would be disrupted if Iranian oil exports were suspended. Qassem Solaimani, the commander of the Al Quds Force in the Revolutionary Guards, joined him to confirm that his country will block oil shipments through the Hormuz Strait if the US administration stops Iranian oil exports. Mohammad Ali Jafari, the commander of the Islamic Revolutionary Guard Corps, said that “either all can use the Strait of Hormuz or no one.”
If Iran does what it threatens to do, oil prices will rise up to $100 a barrel, maybe much more, saying farewell to President Trump’s dream of cheap oil to spur US economic growth. Venezuela can also come under sanctions to facilitate the price hike. But expensive oil will boost America’s shale production. The US appears to pursue two mutually exclusive goals at once. On July 4, President Trump was angry chastising OPEC in a tweet for not doing anything about gas prices going up in the United States. He did not make precise why and how exactly OPEC should bring US gas prices down. From the point of view of US economic interests, the withdrawal from the Iran nuclear deal does not look like a very wise step. But Mr. Trump has already shot himself in the foot and it’s too late to stop now as countering Iran has become a pillar of his foreign policy.
The US military has already responded to confirm its readiness to protect the freedom of navigation. But Iran appears to be adamant. It has too little to lose if the economy collapses as the US wants it to. Iran, Kuwait, Qatar, the UAE, and the largest parts of Saudi Arabian and Iraqi oil exports go through the Hormuz Strait, which accounts for 20 percent of the world oil trade (about 35% of the petroleum traded by sea) or 17-18 million barrels a day plus about 3 million barrels of oil products. Add to it liquefied natural gas shipped from Qatar. The oil goes to different parts of the world and there is no alternative route. Only Saudi Arabia (two pipelines exporting totally 5.1 million barrels a day), the UAE (a pipeline with a capacity of 1.5 million barrels a day) and, to a lesser extent, Iraq (a pipeline to Turkey with an output of 1.5 million barrels) have land transit routes used at 40%, 20% and 40% of their capacities respectively.
The Iranian Navy poses a serious threat but its missiles capable of attacking US warships will be spotted by the American Qatar-based X-band radar station in as little as four minutes. They will be countered by Patriot and Terminal High Altitude Air Defense (THAAD) interceptors located in Saudi Arabia, Kuwait, and the United Arab Emirates augmented by US Navy cruisers and destroyers equipped with Aegis missile defense systems. The Persian Gulf monarchies will probably join the battle.
Mines laid in Hormuz Strait waters will require a long and difficult effort to clear them. US frigate Samuel B. Roberts was nearly sunk after hitting a mine in 1988 during the Tanker War. International law allows for peacetime mining of high-seas areas under certain strict conditions. Laying mines in national waters is hardly an act of war. The Hormuz Strait is completely enclosed by the 12-mile territorial seas of the littoral states. They have special protection under the UN Convention of the Law of the Sea (UNCLOS) not ratified by the United States.
According to different estimates, Iran has a stockpile of 3,000 to 6,000 mines, including bottom-moored buoyant contact and multiple-influence rocket-propelled straight-rising ones. Mine laying activities conducted on a large scale by surface ships aviation can hardly be undetected but submarines can lay enough mines clandestinely to make ship captains think twice before risking a movement through the Strait without a mine clearing ship leading the way. The US Navy has a few Avenger type mine countermeasures ships based in Bahrain.
As a result of the United States’ unilateral decision to withdraw from the nuclear deal and impose sanctions, a potential confrontation is brewing in the Strait of Hormuz. A war is not an impossible scenario. Without oil revenues, Iran will be pushed to the last resort.