What will happen the day after Israel attacks Iran?
Iran will immediately close the strait of Hormuz, and 40% of America’s oil imports will cease to flow.
As I’ve said before, it’s easy to close the Strait of Hormuz. I could do it with twelve Katyusha rockets and a rusty pickup truck.
So, then what? What happens when 40% of America’s oil stops arriving at US oil terminals?
The price of gasoline shoots through the roof.
We have an example of this. In 1973, against overwhelming odds, Israel had the audacity to survive a surprise attack by Syria and Egypt. Worse, Israel went on to win what we now know as the Yom Kippur War. The Arab nations were completely upset by this turn of events and declared an oil embargo, shutting off just 7% of the world’s oil. The result?
The quadrupling of the price of oil, which sent the world economy into free fall.
Will that happen here?
I don’t know.
Warnings: If History Repeats Itself, the Price of Oil Could Reach $440 a Barrel
March 5, 2012 at 9:30pm by Becket Adams, The Blaze
Bob Bandos, president and CEO of GAC North America, a marine logistics and service company headquartered in Dubai, fears that the tension between Iran and the West will lead to an exponential increase in the price of oil.
Many Blaze readers are aware of the details: several Western countries have threatened to sanction Iran if it refuses to abandon its nuclear energy program. In return, Iran has threatened to close the Strait of Hormuz – an artery vital to international oil trade.
“The oil is not just from Iran but also from oil-rich producers Saudi Arabia, Kuwait, Qatar and the United Arab Emirates that feed energy-hungry consumers,” writes Pierre Bertrand of International Business Times. “Daily, 14 supertankers sail through the strait. The largest can carry more than 320,000 tons of cargo.”
It’s not because Iran is threatening to deprive some eurozone countries of oil that several U.S. economists are worried. It’s because closing the strait would effectively cut off 40 percent of all U.S. crude imports. Obviously, this would be extraordinary dangerous for the already-fragile U.S. economy.
Bandos believes that if the Strait were choked off, the effect would be similar to the fuel shortages of the 1970s – but much worse.
“That would be nothing compared to this,” Bandos said, who added that the shortage would be felt on a global level.
“During the 1973 Yom Kippur War between Israel, Egypt and Syria, Arab oil exporters declared an embargo from October 1973 that lasted until April 1974,” Bertrand explains, “World oil prices shot up from $3.40 a barrel to $12. Overall, the world shut off 7 percent of daily production…by contrast, oil has been selling for about $109 a barrel.”