Big Red Car here on Labor Day thinking about a weird topic – accidental war with Iran.
The reason I am thinking about this is a recent threat I have seen in several Middle East periodicals suggesting that Iran will close off the Straits of Hormuz if the US imposes sanctions on the sale of Iranian oil.
The US has already begun to impose sanctions on Iran as of early August with another round of sanctions to hit in November of this year. The November sanctions will include sanctions on Iranian oil.
Iran, why Iran, Big Red Car?
The United States has pulled out of the Joint Comprehensive Plan of Action (JCPOA), the Iran nuke deal, as of 8 May 2018.
That withdrawal triggered the re-imposition of two sets of sanctions:
1. The 7 August 2018 sanctions are imposed on persons who provide material assistance to the Government of Iran in conjunction with the purchase or sale of US bank notes or precious metals.
2. The 5 November 2018 sanctions are imposed on persons who provide material assistance (sponsorship, financial support, material support, technological support, goods, services) to the National Iranian Oil Company, the Naftiran Intertrade Company, or the Central Bank of Iran.
The 5 November 2018 sanctions also prohibit similar assistance to any Iranian person who is on the list of Specifically Designated Nationals and Blocked Persons as promulgated by the Office of Foreign Assets Control.
You may read the Executive Order in its entirety here: Executive Order 13846 Reimposing Certain Sanctions With Respect to Iran
Iran, how are they doing?
One of the reasons Iran might act impulsively is that the economy is going to Hell since the US has withdrawn from the JCPOA. Here is a snapshot of how their currency has been devalued since 2013. This chart seems to indicate the “official” exchange rate is 42,000 Iranial Rial to one USD. In fact, the current rate (spot market, black market rate) in Iran is approximately 120,000 Iranian Rial to a single US Dollar.
This has created domestic unrest in Iran. The Ayatollahs, the real rules of Iran, are understandably beside themselves.
War, Big Red Car?
An accidental war might be triggered by Iran making good on their threats against allowing any oil to be transported through the Straits of Hormuz after the 5 November oil sanctions kick in.
If the Iranians make good on their threat to close off the Straits of Hormuz, the US Navy will ensure freedom of navigation for US shipping by sinking the Iranian navy.
Nobody has much doubt that the US Navy will sink the entire Iranian navy, but the Iranian navy might be able to achieve tactical surprise against an oil tanker or an American Navy ship.
The Russians have an interest in starting some crap in the Straits of Hormuz because they are inching closer to an alliance with the Iranians in Syria.
The Iranian leadership is becoming progressively more desperate and unpredictable as they see their economy tanking while they continue to fund worldwide terror organizations. It is also fertile for a popular rebellion in Iran.
Bottom line it, Big Red Car
The unstable and deteriorating situation in Iran is fraught with peril. The United States has reimposed sanctions as of early August and November 2018. The Iranians have threatened that if oil is unable to be sold they will close the Straits of Hormuz – “If Iranian oil cannot be sold, nobody else will either.”