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12/29/2011

Significant risks from closing the Strait of Hormuz



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The biggest threat to the British economy next year may not come from the euro area, butfrom the Strait of Hormuz, so that one sixth of the world's oil production passes through theneck of the Persian Gulf, and close it could choke the global economy.

That reported in the Times of London, where Pavtaatahitha expressed fears of the possibility of Iran to disrupt oil supplies and the high price. And that if Iran responded, as alleged by the Vice President, to impose sanctions on its oil exports by emphasizing that itwill not pass the "point one" oil from other countries across the Straits, the price will rise a lot. This would be a double blow to the British economy. Since this increase will weakendemand directly and raise industrial costs, but may also force the Bank of England to increase interest rates to show its determination to combat inflation.
The U.S. military has reacted to the threat of Iran yesterday that he will not be tolerated with no break, and that the U.S. Fifth Fleet based in Bahrain to ensure the survival of this vital artery open.
It is worth mentioning that this sea route to the Iranian border narrows to four miles at a certain point, Tehran has tried to disrupt the movement of freight before that mined the Strait during its war with Iraq in the eighties of the last century. In a show of force are now the Iranian Navy military maneuvers in the Strait of Oman next door, including the testing of torpedoes and mines dropped in the sea.
The newspaper pointed out that there is a degree of show of force on both sides, and to restrict Iran's oil exports will push prices higher and hurting the world economy is not convinced the Americans other producers such as Saudi Arabia and Iraq to fill the void. It is clear that there is sufficient capacity available until the start of Libyan oil to flow again.Similarly, Iran knows that block the Strait of Hormuz, a major risk of revenge by the United States could be the brunt of severe fragile economy.
Some analysts believe that the statement, Vice President of Iran close the Strait was just a gesture intended to show of force by raising the price of oil. It is therefore important to continue to put pressure on Iran.
But in return, the West must avoid actions that increase the price of oil without restricting exports of Iran. Because this will hurt the global economy while boosting Iran's ability to finance its nuclear program.

Source: Times



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