Iran's recent threats to close the Strait of Hormuz have elicited worldwide concern about escalation in the Persian Gulf. The unrest along the strategic waterway has raised the specter of war and spiraling oil prices; Hormuz is the obligatory daily transit point for nearly 20% of world energy resources. Concern about escalation is so high that the Obama Administration this week postponed a scheduled joint military exercise with Israel, lest Tehran misread the event as a provocation or pretext for further escalation.
Don't believe Iran's hype. The fierce rhetoric is a reflection of the regime's impotence as a Western-led oil embargo looms. The bluff is an implicit admission of how much the regime fears the ultimate weapon in the Western sanctions toolkit.
Iran is threatening to close the Strait because it knows it can be squeezed out of the oil market without a significant long-term spike in oil prices. Even conflict would have a negligible impact.
For some time already, oil markets have factored in unrest in the Gulf and the risks of conflict with Iran over its nuclear program. Habitual buyers of Iranian oil, such as China and India, are unlikely to sign up to an oil embargo but have already begun scaling down their dependence on Iranian supplies.
Saudi production capacity is expected to make up for the shortfall of Iranian oil. A closure of the Strait will be short-lived—Iran's military capabilities are hardly formidable. Other Arab producers in the Gulf can divert oil to safer shores on the western side of the Arabian Peninsula if need be.
Tehran, in other words, has no arrows left in its quiver. Iran's economy critically depends on oil exports. The U.S. buys no oil from Iran, but Europe accounts for just under a fifth of Iranian oil exports. Iran's fragile and deteriorating circumstances—rampant inflation, currency in free-fall and high unemployment, just to mention a few problems Tehran cannot control—make the regime very vulnerable to such measures. In particular, an oil embargo could destabilize the regime by unleashing a domestic backlash susceptible to revive a beleaguered internal opposition.
With mounting domestic repression, division within the higher echelons of the ruling elites and a contentious parliamentary election scheduled for March 2, the economic shockwave of an embargo could gather the perfect storm inside Iran to send millions into the streets again to protest.
All this should encourage Western policy makers to speed up preparations to approve and begin enforcing the embargo. Instead, Washington and Brussels are delaying what might be the last chance to stop Iran's nuclear quest without recourse to force....there is little time left to stop Iran's nuclear quest. This month Iran confirmed the sudden acceleration of its nuclear program, with the activation of the underground Fordow Enrichment Plant near Qom. Last November, an IAEA report exposed the military dimensions of the program. All of this is clear evidence that Iran is edging closer to the bomb, while shielding the program from military strike with increasing effectiveness. Waiting until June could thwart those wishing to prevent an Iranian bomb peacefully, and only makes a military showdown in the Gulf more likely.
*Dr Ottolenghi is a senior fellow at the Foundation for Defense of Democracies and the author of "The Pasdaran: Inside Iran's Islamic Revolutionary Guards' Corps" (FDD Press, 2011)