Seminar paper from the year 2020 in the subject Economics - Macro-economics, general, grade: 4.5, University of Luzern, language: English, abstract: With my paper, I will illustrate the economic importance of the Strait of Hormuz for the world while giving a short update on the current political situation. Nevertheless, I will keep the focus on possible consequences of Iran closing the Strait, be it on an international or Iranian level. This analysis will be carried out based on recent research. Additionally, similar situations which occurred in the past, namely the conflict between the US and Iran in 1988, which culminated in “Operation Praying Mantis”, can be used to predict the consequences of the closure of the Strait of Hormuz nowadays. Further on, I will construct two scenarios: one of further escalation and another one of de-escalation. Three indicators, that is the development of the price of Brent crude oil, numbers depicting Iranian GDP growth, and the Consumer Price Index will allow me to deliver a prognosis, on what effects each one of these scenarios might have for Iran as well as the global economy. The hypothesis, which is going to be reviewed in the conclusion of this paper, is the following: “A closure of the Strait of Hormuz would have serious consequences for the global economy.”

The continual developments in the Iranian nuclear program have caused increased concern not only for the United States but the majority of the international community as well. While several rounds of United Nations sanctions have been placed on Iran, this has not deterred it from continuing its nuclear advancements. The United States has publicly announced that it does not support Iran's developing nuclear program and will inflict measures to ensure that it discontinues these advances. While these measures have not been clearly defined, Iran has stated that hostile actions taken by the international community, specifically the United States or Israel may result in the closure of the Strait of Hormuz. While Iran has used this threat in the past, primarily in the Iraq-Iran War its full strength has never come to fruition. This thesis aims to determine whether closing the Strait of Hormuz is a viable option as an Iranian retaliation mechanism against increased sanctions from the international community and the United States or a direct attack from either Israel or the United States by analyzing the economic, strategic, and military consequences for Iran, the United States and the Gulf Cooperation Council States.

Some officials of Iran have recently renewed threats to close or exercise control over the Strait of Hormuz. Iran's threats appear to have been prompted by the likely imposition of new multilateral sanctions targeting Iran's economic lifeline - the export of oil and other energy products. In the past, Iranian leaders have made similar threats and comments when the country's oil exports have been threatened. However, as in the past, the prospect of a major disruption of maritime traffic in the Strait risks damaging Iranian interests. U.S. and allied military capabilities in the region remain formidable. This makes a prolonged outright closure of the Strait appear unlikely. Nevertheless, such threats can and do raise tensions in global energy markets and leave the United States and other global oil consumers to consider the risks of another potential conflict in the Middle East. This book examines the Iranian threats to the Strait of Hormuz and analyses the implications of some scenarios for potential U.S. or international conflict with Iran.

The Strait of Hormuz is widely viewed as one of the most important maritime chokepoints in existence today -- certainly it is the most important in terms of the global energy system, with one fifth of the oil consumed worldwide flowing through it each day. Iran has repeatedly threatened to disrupt the flow of oil through the strait, particularly in response to an attack, with potentially dire consequences for the price of oil and the world economy. A review of detailed open-source analysis, however, indicates that Iran's ability to close the strait is not a forgone conclusion, especially in light of the extensive U.S. military presence in the region. Furthermore, closing the strait would also have severe economic consequences for Iran. So, what is Iran's ability to disrupt the flow of oil through the Strait of Hormuz and what is the potential impact to the global energy system? Under what circumstances might Iran attempt to do this? In light of the uncertainty, why does Iran continue to make this threat? This paper shows that Iran's threat to close the Strait of Hormuz represents an information campaign against the United States, to which we have failed to respond adequately.

This updated resource provides a more comprehensive history, including: Iran's Persian imperial past, the spread of Islam, and the Iran-Iraq War The Islamic Revolutionary Guard Corps Navy (IRGCN) emphasizes an asymetric doctrine to ensure national security in the Persian Gulf against regional neighbors and foreign presence. The Islamic Republic of Iran Navy (IRIN) employs a more conventional doctrine and focuses on forward presence and naval diplomacy. Both navies have considerable equities and are well positioned to influence and leverage the Strait of Hormuz; a vital chokepoint for the flow of resources and international commerce. Illustrated with organizational charts, and photos of key Iranian leaders, including commanders within the Navy Command and Control Leadership, as well as rank insignia graphics, maps, ships, aircrafts, missile images, and more. Check out ourMiddle East resources collection for more resources on this topic. You may also be interested in ourForeign Military History collection Other products produced by theUnited States Navy

War With Iran: Political, Military and Economic Consequences provides readers both a history of Iran’s relationship with the West and an expert’s estimation of what the political, human and financial costs of full-scale war with Iran might be. Authors Geoffrey Kemp and John Allen Gay of the Center for the National Interest utilize their years studying and informing America’s foreign policy in the Middle East to bring to life the possible outcomes of an American military intervention in Iran. Such a decision would not only have catastrophic consequences on the Persian Gulf, but would also endanger the whole world’s delicate economy by heightening instability in an already fragile but resource-rich region. Written for anyone with an interest in the future of American foreign policy, War With Iran explores what every player has at stake in the current crisis by analyzing every tension adjacent to it; from America’s staunch support of Israel to Iran’s own dogged pursuit of a nuclear weapon. Controversial, timely and thoroughly researched, this story stands as a preliminary caution against what would be a devastating meltdown of diplomacy, for which—if peace be the goal—there is always time.