Netanyahu says Israel may have to confront Iran

[amandabeech]

26. If Netanyahu attacks Iran, insurance for oil tankers will be unavailable.

Iran sits at the edge of the Straits of Hormuz between the Persian Gulf and the Indian Ocean. The other side abuts Oman. A huge percentage of Middle East oil transits the Straits. The only other ways to get oil out are the pipeline through Saudi Arabia to a port on the Red Sea. The other is the pipeline that runs from Iraqi Kudistan to Turkey and then to a Turkish Mediterranean port. That pipeline has been known to be shut down by fighting among local groups attempting to gain a ransom for leaving the pipeline alone. That pipeline is not well connected to the oil fields in Shiite controlled southern Iraq near the Persian Gulf.

The Straits are very, very narrow. One sunk oil tanker or large U.S. ship will make the Strait impassable. The Iranians may be able to do such a thing with their small swift boats that do not need to follow shipping chanels which are dredged to accommodate huge oil tankers with a full load. If the Straits are closed by either real military action or by the inability to purchase insurance in a tense stand-off, oil prices will rise. In fact, the price of U.S. light (easily made into gasoline and diesel) crude shot up in the last couple of days by about 7% or so, largely due to the situation in the ME.