Under the Amended Iran Sanctions Act, the United States on Jan. 11 sanctioned three companies for doing business with Iran's energy sector, expanding the range of punitive American action on the international stage. The following is the State Department announcement.
“Therefore we have always been saying that they (should) not be present in this waterway.”
Tension has increased between Iran and the United States over the past weeks after the United States imposed new sanctions and Iran threatened to close the Strait of Hormuz. The following are key facts on Iranian oil.
- Iran holds the world’s fourth-largest proven oil reserves and the world’s second-largest natural gas reserves. International sanctions and unfavorable investment terms, however, have impeded developments across the energy sector.
- Iran is OPEC’s second-largest oil producer and the third-largest crude oil exporter in the world.
- Iran has an estimated 137 billion barrels of proven oil reserves, 9.3 percent of the world's total reserves and over 12 percent of OPEC reserves.
- Saudi Arabia, which has been producing about 10 million barrels per day, has an overall production capacity of over 12 million barrels per day and is widely seen as the only OPEC member with sufficient spare capacity to offset major shortages.
- But Iran — the world’s fourth largest producer — pumps about 4 million barrels per day, suggesting that other Gulf states would also have to up their output to offset the decline.
- Iran relies on crude sales for about 65 percent of its of its public revenues, and sanctions or even a pre-emptive measure by Tehran to withhold its crude from the market would batter its already flailing economy.
- China, which bought 11 percent of its oil from Iran during the first 11 months of last year, has cut its January purchase by about 285,000 barrels per day, more than half of the close to 550,000 bpd that it bought through a 2011 contract.
- China, Japan, India and South Korea together import more than 60 percent of Iranian oil exports.
Source: U.S. Energy Information Administration (EIA)
Tension has increased between Iran and the United States over the past weeks after the United States imposed new sanctions and Iran threatened to close the Strait of Hormuz. The following are key facts on the Strait.
- The Strait of Hormuz is the world's most important chokepoint with an oil flow of almost 17 million barrels per day in 2011, up from between 15.5-16.0 million bbl/d in 2009-2010.
- Flows through the Strait in 2011 were roughly 35 percent of all seaborne traded oil, or almost 20 percent of oil traded worldwide.
- On average, 14 crude oil tankers per day passed through the Strait in 2011, with a corresponding amount of empty tankers entering to pick up new cargos. More than 85 percent of these crude oil exports went to Asian markets, with Japan, India, South Korea, and China representing the largest destinations.
- About three-quarters of Japan's oil imports and about 50 percent of China's pass through this strait.
- At its narrowest point, the Strait is 21 miles wide, but the width of the shipping lane in either direction is only two miles, separated by a two-mile buffer zone. The Strait is deep and wide enough to handle the world's largest crude oil tankers, with about two-thirds of oil shipments carried by tankers in excess of 150,000 deadweight tons.
- Closure of the Strait of Hormuz would require the use of longer alternate routes at increased transportation costs.
- Alternate routes include the 745 mile long Petroline, also known as the East-West Pipeline, across Saudi Arabia from Abqaiq to the Red Sea. The East-West Pipeline has a nameplate capacity of about 5 million bbl/d. The Abqaiq-Yanbu natural gas liquids pipeline, which runs parallel to the Petroline to the Red Sea, has a 290,000-bbl/d capacity.
- Additional oil could also be pumped north via the Iraq-Turkey pipeline to the port of Ceyhan on the Mediterranean Sea, but volumes have been limited by the closure of the Strategic pipeline linking north and south Iraq.
- The United Arab Emirates is also completing the 1.5 million bbl/d Abu Dhabi Crude Oil Pipeline pipeline that will cross the emirate of Abu Dhabi and end at the port of Fujairah just south of the Strait. Other alternate routes could include the deactivated 1.65-million bbl/d Iraqi Pipeline across Saudi Arabia (IPSA), and the deactivated 0.5 million-bbl/d Tapline to Lebanon.
- The U.S. Navy’s Fifth Fleet consists of 20-plus ships supported by combat aircraft, with 15,000 people afloat and another 1,000 ashore.
Source: U.S. Energy Information Administration (EIA)
Once de facto allies, Iran and Israel now view each other as rivals for power and influence in the region. The Iranian regime views Israel as a regional competitor bent on undermining its revolutionary system; Israel sees Iran as its predominant security challenge posing grave strategic and ideological challenges to the Jewish state. Israeli concerns that the Arab uprisings may benefit Iran and enhance its regional influence have only deepened Israeli alarm, even if the reality of enhanced Iranian influence may be questionable.
The emergence of a nuclear-armed Iran in the future could increase the prospects for direct armed conflict between the two nations. Israel might choose to preemptively strike Iranian nuclear facilities in an effort to thwart or delay such a development. A nuclear-armed Iran may view Israel as its primary regional competitor and could demonstrate its nuclear capability in the event of an armed conflict. Even if Iran has no intention to use nuclear weapons against Israel, the possibilities of miscalculation as regional crises escalate are high. The lack of direct communication between the two countries could potentially lead to misinterpreted signals and confusion regarding each actor’s intentions and red lines. Even those who are optimistic about the ability of Israel and Iran to create a stable nuclear deterrence relationship may recognize that developing and stabilizing such a relationship is going to take time. Arguably, this transition period could be particularly dangerous.
Despite the Current Animosity, Israel and Iran Have Not Always Been Rivals
Israel and Iran are not natural competitors and are not destined for perpetual conflict. Indeed, these two regional powers do not have territorial disputes nor do they compete economically. Each country has traditionally maintained distinct regional zones of interest (the Levant for Israel and the Persian Gulf for Iran). Arab governments regard each with great suspicion.
Only in the Last Decade Have Israel and Iran Come to View Each Other as Direct Rivals
As late as the 1990s, Israel’s security establishment did not consider Iran as its predominant security challenge. Yet today, Israelis view nearly every regional threat through the prism of Iran. Israel’s threat perceptions of Iran stem in part from expanding Iranian missile capabilities and nuclear advances. But just as critical is Israel’s view that Iranian regional influence is on the rise, infringing on core Israeli interests and threatening stability in areas bordering Israel. Israeli leaders worry that if Iran acquired a nuclear weapons capability, its influence would only increase, severely limiting both Israeli and U.S. military and political maneuverability in the region.
The rise of Iranian principlists (fundamentalists) has also increased Iranian hostility toward and threat perceptions of Israel. This is due to the evolving nature of Iran’s political system, including the rise of the Revolutionary Guards and the principlists under President Mahmoud Ahmadinejad (2005– ). The current configuration of the regime has produced an intense ideological hostility not seen since the early days of the revolution.
Moreover, the Middle East’s geopolitical transformation over the last decade has intensified the rivalry. The U.S. invasion of Iraq in 2003 eliminated a common adversary of both Israel and Iran. Iran began to see itself as the Middle East’s ascendant power, a view shared by many of Israel’s political and military elite. Other events such as the 2006 war between Hizballah and Israel—in which Iranian tactics and arms were seen as effective against Israel—reinforced the viewpoint of Iran as the region’s great power. The Arab uprisings of 2011 have further fed Israeli concerns, although that turmoil has also created some new vulnerabilities and limitations for Iranian influence. The new regional landscape has enhanced Israeli fears of continued Iranian penetration into contested arenas close to home (particularly Gaza and Lebanon) and Iranian perceptions of the United States as a declining power.
Rifts Are Emerging Within Israel’s Strategic Community About the Value of a Military Strike Option
Differing cost-benefit assessments of a military strike option against Iran exist among both Israeli officials and security analysts. Those arguing in favor of this option believe that the political and military consequences of such a strike may be exaggerated and that even a delay in Iran’s program would justify an attack if the alternative is a nuclear- armed Iran. Those arguing against a military strike believe that it could lead to a wider regional war without effectively halting the Iranian pro- gram. Divisions within Israel’s strategic community on Iran policy cut across party lines and government institutions, residing largely with individual personalities. Israeli views on the effectiveness of sanctions and sabotage efforts as well as the U.S. position could affect these internal debates.
Looking to the future, if Iran acquires nuclear weapons, and particularly if it assumes an overt posture, Israel may reassess its own nuclear posture of ambiguity. Israel may also seek additional security assurances from the United States, although it may be reluctant to forge a formal security pact because that may undermine the credibility of its own deterrence and limit its military and diplomatic freedom of action.
The Emergence of a New Regime in Iran Could Reshape the Rivalry
A different set of Iranian leaders with less hostile views of Israel could diminish the rivalry between the two nations. The political and economic interests of reformists and pragmatic conservatives could lead to a lessening of tensions if these groups were to gain power in the future. The potential emergence of a secular democratic Iran may entirely obviate the need for a continued rivalry with Israel. Conversely, the complete militarization of Iranian politics under the Revolutionary Guards could lead to a heightening of tensions and Iranian adventurism.
To view the full report, click here.
The Islamists Are Coming
The Islamists Are Coming, edited by Robin Wright, surveys the rise of Islamist groups in the wake of the Arab Spring. Often lumped together, the more than 50 Islamist parties with millions of followers now constitute a whole new spectrum—separate from either militants or secular parties. They will shape the new order in the world’s most volatile region more than any other political bloc. Yet they have diverse goals and different constituencies. Sometimes they are even rivals.
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