It is asserted by many that the shooting down of Iran Air flight 655 by the Guided Missile Crusier USS Vincennes with the loss of 290 civilians and crew convinced the Ayatollah Khomeini to end the war with Iraq, a war that had severely impacted on passage of shipping through the straits, and indeed it finished a month later.

He was said to have remarked that if the US were capable of this act then they were to be greatly feared and as they were supplying Saddam Hussein with weapons and intelligence victory was not possible. Why would the Iranians now fear the US any less than before?

Hi Bazz

The Straits are around 25 miles wide. However there are only two dredged shipping channels. Blocking both of these would block the Straits.

However:

(1) 75-80% of the world's oil supply does NOT pass through the Straits. Presumably pumping at other sites could, for a price, be increased on a temporary basis. Thus even in the worst case of a total blockage lasting weeks the world would still get over 80% of its oil supply while the channels were cleared. It might be unpleasant for a while but it would not be the end of civilisation.

(2) However I doubt Iran would be able to block both channels. The US is monitoring Iranian activity in the region in real time so Iran would not have the advantage of surprise. Even a hint of an attempt to block a channel would provoke a fierce US response. It would be "shock and awe" on steroids.

(3) Perhaps, most important, while the world would be able to limp on with 80% of normal supply, practically 100% of Iran's oil exports would be blocked. Given the dependence of Iran on oil exports this would be a national catastrophe. It would be tantamount to regime suicide.

csteel:

The leaders of the Iranian regime are not stupid. However much they may bluster in public I doubt they would be so foolish as to give the US a casus belli.

Of course Iran could avert all this unpleasantness by opening up its (expensive) uranium enrichment program to inspection or, better, abandoning it entirely. The money saved could be spent on projects that facilitate economic development in what is actually quite a poor country.

As I said previously, the strait is not entirely in Iranian waters, and blocking it would be an act of war.

With the US 5th fleet stationed at Bahrain a couple of 100k away, the retribution would be swift, and instead of facing a partial embargo, it could end up with a total blockade. Unless the Iranians were suicidal this is just bluster.

Steven,
I agree, it is most likely bluff, but it is a very dangerous bluff.
The repercussions from even a short blockade would push prices up so
far that Europe & the Euro would probably immediately go into a severe recession.
20% reduction in supply should not matter so much but as seems likely
there is no slack in the system to take up even a small percentage of
the 20%. There is already a severe shortage of diesel in Asia and the
Tapis price is $117 a barrel last time I looked.
The demand by Japan alone on Tapis could mean $150-$170 a barrel which
may well put Australia into recession.
The price plus a cut in supply from the Tapis market of who knows how
much would give our treasurer Wayne Swann plenty of excuses.

A blockade may be a possibility if the suicide syndrome is reality in the Iranian government.

Bazz,

In the unlikely event that Iran tried blocking the Straits and in the HIGHLY unlikely event that they succeeded in blocking it for a significant period – say longer than a week – then yes the world would be plunged into a severe recession.

But we'd come out of it quite quickly once the flow of oil was resumed. On the other hand it would be suicide for Iran. Would the Americans even allow Iranian oil through the Straits once they'd cleared it? My guess is they would – at a price, a very high price.

I doubt the regime could survive the fallout from blocking the Straits.

On the other hand, if Iran does have what you call "suicide syndrome" what happens if they get nukes? That could trigger something worse than a "mere" recession.

As it happens the Israelis seem to have destroyed Assad's nuclear ambitions. Imagine if highly unstable Syria was a nuclear armed state

Steven,
I had a look at the chart for the strait and outside the designated
channels part loaded tankers could probably get through.
So even if they sank some tankers in the channels oil could still get
through. They could pump from one to the other once outside, then the
empty one could go back in.
However like all things the insurance companies make the rules and they
may make the gulf a no no.