Is It Always About Oil?

It often comes down to oil whether directly or indirectly. The oft-promoted start date for the beginning of tensions between the United States and Iran has always been 1979 when Iranians took over the American embassy and held 66 hostages. In reality, tensions began in 1953 when the United States along with Great Britain toppled the democratically elected government of Mohammad Mosaddegh which led to the restoration of the brutal regime of the Shah of Iran. The reason for the American/British coup was Iran's nationalizing of its oil industry.

The U.S. military operation in Venezuela, which drew international condemnation, was justified by Washington as a law enforcement operation targeting narcotics trafficking and national security threats. Critics, however, believed that broader geopolitical and energy interests - including Venezuela's vast oil reserves - played a critical role.

While the Strait of Hormuz is the present center of attention, and rightly so, what is forgotten are the other potential chokeholds. The conflict today is Iran's insistence on ships adhering to its Iranian Traffic Separation Scheme which is operated by the Islamic Revolutionary Guard Corp. (IRGC) scheme as opposed to the traditional traffic separation scheme established by the International Maritime organization. Unfortunately, due to the presence of mines placed by Iran, ships are unable and unwilling to use the traditional traffic separation scheme.

Oil is flowing from Iranian ports. According to the Wall St. Journal, it is projected that Iran will realize up to ten billion dollars over the next two months.

Given the significance of the Strait of Hormuz, people often forget the Bab el Mandeb waterway known as the Gate of Tears which accounts for 10-12% of the world's oil traffic and 25% of global container traffic. It was here that the United States fought against the Houthis in Yemen who were attacking ships going through the waterway. An Omani brokered agreement was made between the two belligerents which led to a brief ceasefire. Most analysts however believe that despite the military actions of the United States, the Houthis maintain "significant coercive influence" over Bab el Mandeb.

One reason why the US wants the war to end on any terms is because of oil. The United States today has 330 million barrels of oil in its Strategic Petroleum Reserve, which is partly why gas prices have declined slightly in the nation. This is the lowest level since 1983 as it has used approximately 75-80 million barrels of oil. Many of us will remember the oil embargo and the gas lines of the 1970s where cars filled their tanks according to whether their license plate was odd or even.

China, according to the US energy information administration reportedly has 1.6 billion barrels of oil in reserve plus another 1 billion of equity oil in other nations such as Kazakhstan, Iraq, Brazil and Algeria.

There are those who believe the US should engage in military escalation against Iran. The US military is clearly superior but according to the center for Strategic and International Studies (CSIS), Iran has the largest missile arsenal in the Middle East and if past is prologue they would not hesitate to use them against the Gulf states as well as Israel. The US is not in a good scenario at present. Even when taking its military superiority in consideration, Iran could still cause havoc. Iran could still threaten American military bases in the Middle East, resume the disruption of energy supplies which would have a tremendous political cost in the United States. It could also call upon its proxies in the region to become more proactive. In other words, the US military might doesn't protect it from unintended consequences.