Townhall.com posted an Associated Press report on recent tensions in the Straits of Hormuz. Iran is conducting military exercises in the Straits supposedly practicing closing the Straits, which the Iranians have threatened to do if Western countries impose economic sanctions because of Iran’s nuclear program. America has stated that it will not tolerate any disruptions to the Straits. Excuse my skepticism, but based on how America has handled the entire nuclear program in Iran, I am not sure how seriously America’s statement will be taken.
The article reports:
The U.S. Congress has passed a bill banning dealings with the Iran Central Bank, and President Barack Obama has said he will sign it despite his misgivings. Critics warn it could impose hardships on U.S. allies and drive up oil prices.
The bill could impose penalties on foreign firms that do business with Iran’s central bank. European and Asian nations import Iranian oil and use its central bank for the transactions.
Iran is the world’s fourth-largest oil producer, with an output of about 4 million barrels of oil a day. It relies on oil exports for about 80 percent of its public revenues.
The interesting part of the above statement is that Iran relies on oil exports for about 80 percent of its public revenues. The question is simple–“Would Iran be willing to cut off 80 percent of its revenue in order to continue its nuclear program?” Are we leading up to a situation similar to what we had in Iraq’s ‘food for oil’ program, where the leaders on the country will live very well and the people will starve?
I am making no bets on who will blink first.