Should Iran Bomb The Gulf Or The Strait Of Hormuz The Oil Price WILL Explode

The bombs will start falling at Christmastime. It could get very nasty.

All the players are primed and ready... and it could lead to one of the biggest oil shocks the world has ever seen.

Iran’s nuclear facilities will be bombed. The attack plan has already been made. It has been rehearsed in large-scale ocean manoeuvres and everything is in place for the assault.

It’s just a question of when.

The "when" question is fairly easy to work out. The most likely time for the bombing will be after the US presidential election on 4 November and before the inauguration on 20 January. Hawks will make use of the US power vacuum.

Republicans will not want to interfere with the election process. They do not trust the Democrats to do the right thing. If Obama is elected, they will have nothing to lose. If McCain is elected, he’d be delighted to give an attack the nod.

It may be the Israelis that do the actual bombing, but the Americans, British and French will be major players. They’ve just finished practicing their plan.

If Iran is attacked, then all bets regarding the oil price will be off. The oil shock of the 1970s will pale in comparison.

Iran is Opec’s second-largest crude oil producer after Saudi Arabia. It has a daily output of around 4m barrels.

Losing this would be a substantial bite out of current global production of 85.5m barrels per day. Other Opec nations would be unable to make up this shortfall. Non-Opec nations will not be able to either. It is also likely to lead to wider disruption in the most important oil-producing area of the world.

Many powerful conservatives are desperate to bomb the country — despite what it could do to the oil price. In fact, some of the more warmongering types have been talking down the consequences of any attack in order to make them more palatable.

Arch US hawk John Bolton reckons that it won’t be a problem if Iran is bombed. He thinks Iran’s options to retaliate after being attacked are less broad than people thought and it wouldn’t want to escalate the conflict anyway.

Bolton reckons Iran would want to see a brief campaign because it still needs to export oil to keep its economy going. He also thinks the Iranians would worry about an even greater response from Israel and the US should they take action in the Straits of Hormuz.

Bolton is wrong.

An attack on Iran will be a massive problem for the global economy at a time when it is extremely fragile. Any action will send the oil price through the roof.

This fact is probably the only thing holding the US back... but should Obama win, the calls to George W Bush to act while he still can will be deafening.

There is supporting evidence that preparations are already underway.

A couple of weeks ago, the Middle East Times reported that the USS Ronald Reagan and its Carrier Strike Group Seven as well as the USS Iwo Jima (an amphibious assault ship) were heading for the Gulf.

The newspaper also said that HMS Ark Royal and a number of French warships were also sailing for Iran’s shores. This, however, was denied by the US Defence Department.

I know for a fact that part of this report was wrong. The Ark Royal was nowhere near the Gulf on the day this story was printed.

On 14 August HMS Ark Royal sailed into Portsmouth Harbour from the US. The return was noteworthy because a new captain was at the helm and it made the local press. There are pictures of the ship docked in the UK all over the internet.

However, because the Ark Royal was not where the report said it was, that does not mean the gist of the story is not true. Let’s consider where the Ark Royal had been, with its shiny new commander at the helm. That is much more interesting.

The Royal Navy flagship was returning from joint operations with the US and France off the North Carolina coast. It had been taking part in a training operation, rather ominously called ‘Operation Brimstone’.

More than a dozen ships rehearsed for a blockade of Iran. The drill was aimed at training for operation in shallow coastal waters such as those seen in the Persian Gulf and the Strait of Hormuz.

Following these manoeuvres, an armada is being built.

Gary North, a US colleague, reported yesterday that the USS Abraham Lincoln and the USS Peleliu were already in the Persian Gulf. He also said that a naval source had verified to him that the USS Iwo Jima was dispatched to the Gulf on 22 August. I cannot verify North’s sources, but it all makes sense to me.

The Western press may not have picked up on the floating army being assembled in the Gulf... but the Iranians have certainly taken heed.

On 20 August the Iranian navy launched a missile which they said would be able to easily close the Strait of Hormuz. They know an armada is coming.

You should be concerned too

Up to 40% of the world’s oil supplies pass through the Straits of Hormuz. It is one of the most strategically important waterways in the entire world.

At its narrowest point, the Straits are just 21 miles wide. It has this in common with the English Channel, which is also 21 miles wide at its narrowest point between Dover and Cape Gris-Nez. My point is that this is a very narrow waterway. It is easy to blockade.

The Americans want to block the Straits of Hormuz to stop Iranian imports of benzene. This will cripple the country’s economy. Let me explain why.

Because Iran has limited refinery capacity, it adulterates its petrol with benzene to make it go further. We do not do that in the west, because benzene is a carcinogen. The health and safety fascists would go bonkers. However, Iran does not have much choice.

Iran is forced to import 40% of its refined fuel products from Gulf neighbours. It does not have the refinery capacity to process its own oil into useful products. If these benzene supplies were cut off, vehicles all over the country would be starved of fuel. The vehicles — and the economy — would grind to a halt.

Cutting off these supplies would be a perfect compliment to any bombing campaign. It would make Ahmadinejad very unpopular domestically... it could even lead to his downfall without any politically untenable ground attack. Dick Cheney must be close to wetting himself at the prospect.

The Israelis are also keen to bomb the country. That’s why they must be very, very concerned about the power vacuum at the heart of the US government.

George Bush’s government is a lame duck. The new president doesn’t move into the Oval Office until the end of January. He will then have to put his government together before the American administration is fully functioning. This could take months.

This is a big problem for the Israelis, who see the Iran threat as a very real and present danger. The thought of an impotent America for the next 6-8 months must fill them with utter dread.

They will be pressing for a US attack behind the scenes. Israel has a history of being proactive when nuclear threats are close to its borders... but it would obviously rather have US support.

In 2007, the Israeli Air Force bombed a nuclear reactor in Syria. Israeli hawks must be pressing for an attack, whatever the impact on petrol prices.

A two-pronged attack that bombed nuclear facilities and cut off benzene supplies could easily get the US exactly what they want in Iran.

It could destroy any chance of Iran getting the bomb and force Ahmadinejad out of office. It won’t take much to convince the current US administration to come along to this particular party.

So, the world is gearing up for action in Iran. The plan has been made. The warships have practiced. The will is there.

I think Israel will bomb suspected Iranian nuclear facilities and a US-led task force will block the Straits of Hormuz.

All this is likely to happen sometime in the US interregnum period around Christmas. If it does, the oil price will go utterly ballistic.

Click here to discover more about my resource newsletter Smart Commodities UK.

Regards,

Garry White
Editor
Smart Commodities UK P.S. If you enjoyed this article then sign up for Smart Commodities UK. It’s dedicated to searching out the investment trends that could provide our biggest profit opportunities for the next decade…

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Should Iran Bomb The Gulf Or The Strait Of Hormuz The Oil Price WILL Explode

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