Most of the world's oil supply travels through the narrow Strait of Hormuz. Picture: Supplied
Most of the world's oil supply travels through the narrow Strait of Hormuz. Picture: Supplied

‘Trigger for war’ that could ruin Australia

It means nothing to the US. It means catastrophe for Australia. It could drive China to take up arms.

If the US-Iran clash escalates into war, it has potentially global implications.

And it all comes down to one narrow waterway: the Strait of Hormuz.

If fighting closes this gateway to the Middle East, it will choke the arterial shipping flow of oil and gas to the world.

Many economies will suffer. Hard.

The US is OK: It gets most of its fuel oil and gas from fracking.

Australia is not: It relies on oil extracted in the Middle East and processed in Asia. It has no strategic fuel reserves. It must rely on US generosity to top it up in an emergency.

China will be ropeable. This is precisely what its strategic thinkers have feared for decades. It's also why it has sunk billions into its Belt-and-Road diplomatic project as well as aggressively establishing a military presence in the South China and Andaman seas and the Indian Ocean. Beijing is prepared to fight to keep fuel flowing out of the Middle East.

PEACE IN THE BALANCE

Some 21 per cent of the world's crude oil passes through the 34km-wide Strait of Hormuz. Then there's all the gas.

The point is, some regions are more reliant on it than others.

Japan, China, South-East Asia - and Australia - are heavily dependent on this troubled part of the world.

And Australia has no strategic reserves.

Despite reassurances, nerves are again beginning to fray.

The US Maritime Administration has issued an alert over potential Iranian attacks against "maritime interests in the region".

The UK has declared it will resume close escort by warships to protect its tankers. Japan is sending its warships for the same purpose.

Earlier this month, Iran's small navy exercised with Russian and Chinese warships in a simulated battle to defend the strait.

That is both good and bad news.

"Iran will … be wary of the impact that closing the Strait of Hormuz could have on its relations with important economic partners, such as China," writes maritime studies professor Rockford Weitz.

"It is estimated that 76 per cent of crude oil passing through the waterway is destined for Asian markets."

But Iran may be able to present the US as the bad guys to its Chinese and Russian allies.

And China, if it chooses, could use that as a trigger for war.

The Strait of Hormuz has become a major global chokepoint. Picture: Google Maps
The Strait of Hormuz has become a major global chokepoint. Picture: Google Maps

TAKING SIDES

In June last year, Russian President Vladimir Putin, Chinese Chairman Xi Jinping and Iranian President Hassan Rouhani held high-profile public appearances at a meeting of the Shanghai Cooperation Organisation.

That's the name of the regional security and political co-operation alliance of which the three powers are key members. It's an alliance that could soon be called into play.

Beijing has expressed its dismay at President Trump's order to kill General Qassem Soleimani.

Chinese Foreign Minister Wang Yi at the weekend condemned the "military adventurist act by the US". He asserted it "goes against basic norms governing international relations and will aggravate tensions and turbulence in the region".

Tehran certainly hopes Beijing will respond further. A statement reads Iran hopes China will "play an important role in preventing escalation of regional tensions".

For the first time, Beijing is in a position to do so.

It maintains a powerful "anti-piracy" force at nearby military bases in the Horn of Africa. It has also begun efforts to establish bases in Pakistan and Sri Lanka.

It has made little effort to hide its intentions to secure the arterial shipping routes between it and the Middle East.

Atlantic Council analyst Jonathan Fulton says, whatever the outcome, the current crisis is likely to end up strengthening China's position in the region.

"In the short term (killing Soleimani and the airfield attacks) will increase the cost of doing business and most likely put a lot of people at risk. In the long term, however, it may increase China's power and influence in the Middle East as it assumes a larger responsibility for securing its regional interests."

Beijing has expressed its dismay at President Trump’s order to kill General Soleimani. Picture: AP Photo/Alex Brandon
Beijing has expressed its dismay at President Trump’s order to kill General Soleimani. Picture: AP Photo/Alex Brandon

FUELLING THE FIRE

The risk to the global economy is well understood in the Middle East. The United Arab Emirates' energy minister quickly sought to reassure the world he saw no immediate risk to the flow of fuel through the Strait of Hormuz after yesterday's attack.

"We will not see a war," Suhail al-Mazrouei said, adding the clash should not be blown out of context. "This is definitely an escalation between the United States, which is an ally, and Iran, which is a neighbour, and the last thing we want is more tension in the Middle East."

Oil prices have begun to climb after news of the assassination of Iran's top general last week. It rose - modestly - again after yesterday's retaliatory attack.

International nervousness began to grow after a series of attacks on tankers near the strait last year. Oil prices spiked after an Iranian cruise missile attack on Saudi Arabia's most significant production facility.

Australia has since sent a surveillance aircraft and a frigate to join a small international coalition to police the waterway.

"We are not forecasting any shortage of supply unless there is a catastrophic escalation, which we don't see," Mr al-Mazrouei said.

However, Iran also knows how vulnerable the world is to what happens in this trade chokepoint.

"As a researcher who studies strategic maritime chokepoints like this one in the Middle East, I have seen how past skirmishes in this waterway have fit into Iran's use of hybrid warfare," writes Prof Weitz. Hybrid warfare is the use of unconventional tactics that don't trigger conventional military retaliation.

"In fact, Iranian leaders will likely feel tremendous political pressure to ratchet up maritime hybrid warfare in response to the drone strike that killed the general."

 

STOPPING THE BOATS

Minister for Energy and Emissions Reduction Angas Taylor declared last year: "We've decided to begin negotiations with the United States to ensure that we have a strategic reserve in place for circumstances that could emerge for scenarios that are unfavourable to Australia. This is a sensible, low-cost way of going about this."

There are problems, however.

The strategic reserve remains in the US.

And, if Australia is even in a position to call upon this reserve, it owns no ships capable of transporting it.

Prof Weitz is doubtful things will escalate that far.

"In the past both the US and Iran have pivoted back to diplomatic solutions when tensions have become too high, suggesting that neither side wants to see the conflict escalate from hybrid warfare into a full-blown war," he said.

And stopping the boats is no easy task, he says.

"In my view, Iran would certainly have trouble stopping all shipping through the Strait of Hormuz. Modern cargo vessels are massive and difficult to disable. Unlike in the 1980s, most oil tankers now have double hulls, making them harder to sink. Furthermore, earlier this year, the US assembled a multinational coalition to monitor and respond to threats to commercial shipping in the strait."

 

A SLAP: NOT REVENGE

"For the time being, the Americans have been given a slap, revenge is a different issue," Iran's Fars News Agency quoted Iran's Supreme Leader, Ayatollah Ali Khamenei, as saying, "Military moves like this are not enough. The Americans' corruption-stirring presence should come to an end."

Satellite photos taken by the commercial Earth observation company Planet and distributed by the Middlebury Institute of International Studies show hangars and buildings demolished by the impact of Iranian missiles. About five structures appear to have been damaged at the Ain al-Asad air base in Iraq.

This satellite image shows the damage caused from an Iranian missile strike at the Ain al-Asad air base in Iraq. Picture: Planet Labs Inc./Middlebury Institute of International Studies via AP
This satellite image shows the damage caused from an Iranian missile strike at the Ain al-Asad air base in Iraq. Picture: Planet Labs Inc./Middlebury Institute of International Studies via AP

Pictures of the Irbil base are yet to be released.

Debris of failed Iranian ballistic missiles recovered in Iraq appears to show they were of the Qiam-1 type, a single-stage, liquid-fuelled, short-range weapon with a range of about 800km. It is a precision-guided update of the old Scud missiles used during the first Gulf War. It carries a sizeable 750kg warhead.

Sixteen missiles appear to have been launched. Three may have failed mid-flight. Ominously, no US mobile Patriot missile defence batteries were in a position to defend against the attack.

"US early-warning systems detected the incoming ballistic missiles well in advance, providing US and Coalition forces adequate time to take appropriate force protection measures," a US defence department official said.

What remains unknown is if this marks a new delicate balance in the tit-for-tat exchange between the two nations. But both leaders can now point to victories to appease their supporters.

An unsteady looking President Trump offered Iran an out at a press conference overnight: "Iran appears to be standing down," he said.

Earlier, Iran's foreign minister said the attack "concluded proportionate measures" in response to the killing of General Qassem Soleimani: "We do not seek escalation or war."

Jamie Seidel is a freelance writer | @JamieSeidel


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