Iran Strait Shutdown 'Could Be Cataclysmic': Ex-Shell Exec
Could Iran block one of the world's vital oil shipping lanes, the Strait of Hormuz, and face off against the U.S. Navy?
"You never know. This is a very unpredictable regime," John Hofmeister, former CEO of U.S. operations at Shell Oil, told CNBC on Thursday.
After the threat of more sanctions for its nuclear program, Iran on Tuesday threatened to close the strait, through which 15.5 million barrels a day or 17 percent of oil traded worldwide passes, according to the EIA.
Crude from Saudi Arabia, Iran, the United Arab Emirates, Kuwait and Iraq pass through that chokepoint at the mouth of the Persian Gulf.
Iran's threat pushed the price of oil higher, one reason why economists now think oil will be above $100 a barrel through next year.
If Iran shuts the strait "that would be cataclysmic for the oil price and the economy, particularly if they figure out a way to shut it down for an extended period," said Hofmeister, now CEO of Citizens for Affordable Energy, which promotes development of U.S. energy resources.
"So much oil comes through there that the world would be crippled and come to its knees. For the Iranians to pull that off I think would be all but Armaggedon time, and I just don’t see that happening," he said. "But I can see the threats happening."
Iran could take a page from the 1950s blockade of the Suez Canal and sink ships in the middle of the strait so other vessels can't pass. Or it can use nuclear weapons to make the waters radioactive, a "more problematic scenario," Hofmeister said.
The U.S. Navy could respond to the threat by lining the strait with its many warships to keep the Iranians away, Hofmeister said.
"You can stop the harassment with a few tactical ships lined up in the right positions," he said. "Who’s going to face down the U.S. Navy? Not too many people are dumb enough to face down the U.S. Navy."
Hofmeister said the threat points out the need "to take care of our own national energy security."
Reuters contributed to this report.