The second order effect of shutting down the Strait of Hormuz would be to collapse huge derivatives market. From Pepe Escobar at strategic-culture.org:
Sooner or later the US “maximum pressure” on Iran would inevitably be met by “maximum counter-pressure”. Sparks are ominously bound to fly.
For the past few days, intelligence circles across Eurasia had been prodding Tehran to consider a quite straightforward scenario. There would be no need to shut down the Strait of Hormuz if Quds Force commander, General Qasem Soleimani, the ultimate Pentagon bête noire, explained in detail, on global media, that Washington simply does not have the military capacity to keep the Strait open.
As I previously reported, shutting down the Strait of Hormuz
would destroy the American economy by detonating the $1.2 quadrillion derivatives market; and that would collapse the world banking system, crushing the world’s $80 trillion GDP and causing an unprecedented depression.
Soleimani should also state bluntly that Iran may in fact shut down the Strait of Hormuz if the nation is prevented from exporting essential two million barrels of oil a day, mostly to Asia. Exports, which before illegal US sanctions and de facto blockade would normally reach 2.5 million barrels a day, now may be down to only 400,000.
Somebody in the Trump administration looked at a map of the Middle East and figured out that if Persia (Iran) blocked the Strait of Hormuz access to the Persian Gulf, it would send the price of oil sky high. That might gum up the global economy, financial markets, and Trump’s reelection bid. From Pepe Escobar at atimes.com:
Iranian soldiers take part in National Persian Gulf Day in the Strait of Hormuz on April 30, 2019. There is concern about a blockade of the Strait and the disastrous impact that could have on the price of oil and world financial markets. Photo: AFP / Atta Kenare
If Tehran blocks the Strait of Hormuz it could send the price of oil soaring and cause a global recession
Unlike Deep Purple’s legendary ‘Smoke on the Water’ – “We all came out to Montreux, on the Lake Geneva shoreline”, the 67th Bilderberg group meetings produced no fire and no smoke at the luxurious Fairmont Le Montreux Palace Hotel.
The 130 elite guests had a jolly good – and theoretically quiet – time at the self-billed “informal discussion forum concerning major issues”. As usual, at least two-thirds were European decision-makers, with the rest coming from North America.
The fact that a few major players in this Atlanticist Valhalla are closely associated with or directly interfering with the Bank for International Settlements (BIS) in Basel – the central bank of central banks – is of course just a minor detail.
The major issue discussed this year was “A Stable Strategic Order”, a lofty endeavor that can be interpreted either as the making of a New World Order or just a benign effort by selfless elites to guide mankind to enlightenment.
Other items of discussion were way more pragmatic – from “The Future of Capitalism”, to “Russia”, “China”, “Weaponizing Social Media”, “Brexit”, “What’s Next for Europe”, “Ethics of Artificial Intelligence” and last but not least, “Climate Change”.
The general answer to the above question: it wouldn’t be good. From Scott Ritter at theamericanconservative.com:
Some 18 million barrels of oil transit through every day. The economic impact would be catastrophic.
U.S. Navy Sailors Assigned to the harbor patrol boat unit off the coast of Bahrain in 2006. (U.S. Navy/public domain)
The effort on the part of the Trump administration to shut down Iran’s ability to export oil is predicated on the false notion that the rest of the world will fall in lockstep with U.S. policy. But has President Donald Trump really thought through what would happen to the economic health of the world if Iran retaliates, shutting the Strait of Hormuz, through which much of the world’s oil flows daily?
The Trump administration’s push to reduce Iran’s oil exports to zero has entered a new, critical phase, with the United States refusing to extend the waivers it granted six months ago to eight nations, including China, India, Turkey, Japan, and South Korea, to purchase Iranian oil. Moreover, the United States has refused to allow for a “wind-down” period where impacted nations would be able to gradually wean themselves away from Iranian sources of energy. This means that, effective May 1, any nation purchasing oil from Iran will be subjected to punitive U.S. sanctions.
Iran has responded to the American decision not to extend oil waivers in typical fashion, with Rear Admiral Alireza Tangsiri, the commander of the Iranian Revolutionary Guard Command (IRGC) naval forces, warning on April 23 that “if Iran’s benefits in the Strait of Hormuz, which according to international rules is an international waterway, are denied, we will close it”.
Iran is issuing dire threats if the US blocks its oil exports. From Tyler Durden at zerohedge.com:
Iran’s president Hassan Rouhani warned the US not to threaten the nation’s oil exports, called for improved relations with its neighbors including arch-nemesis Saudi Arabia, and cautioned the US that a conflict with Iran would be “the mother of all wars.”
“Don’t play with the lion’s tail, this would only lead to regret,” Iran’s leader said during a speech with Iranian diplomats on Sunday, the semi-official Iranian Students’ News agency reported. “The Americans must understand well that peace with Iran is the mother of all peace, and war with Iran is the mother of all wars” he said, adding that Iranians will only be united by further threats from the US, and that the Islamic Republic “will certainly defeat America.”
Iran military drill in the Strait of Hormuz, photo credit: AFP
The latest attack against president Trump by Rouhani came one day after Supreme Leader Ayatollah Ali Khamenei backed the idea of blocking all oil exports from the region by closing the Strait of Hormuz in the event of Iran’s exports being banned. He also said that “U.S. govt.’s words or even signatures cannot be relied on; thus negotiations with the U.S. are useless. The assumption that negotiations or establishing ties with the U.S. would solve country’s problems is an obvious error.”
While Iran’s belligerence toward the US (and vice versa) is nothing new, there was a surprising twist when Rouhani said that Iran would seek improved relations with its Arab neighbors in the Persian Gulf, including Saudi Arabia, the United Arab Emirates and Bahrain, according to Bloomberg. But he also said Saudi Arabia still needs to “change its actions, let go of obstinacy and be willing to have relations.”
Iran’s anger is the result of Trump’s recent decision to withdraw from Obama’s landmark nuclear deal, and Trump’s subsequent pressure on US allies to completely cut imports of Iranian crude in response to Tehran’s alleged malign activities. Those who fail to comply with America’s request would be targeted by secondary US sanctions. Following Trump’s withdrawal, Iran has been working with the EU to salvage the 2015 the accord.
To continue reading: Iran Warns Trump Not To Cut Off Oil Exports, Threatens “Mother Of All Wars”