Iran ramped up threats of retaliation for U.S. sanctions on its oil exports this week, with President Hassan Rouhani reiterating suggestions that his government could close the Strait of Hormuz, through which some 30 percent of the world’s oil shipments pass.
While this is in fact unrealistic due to the U.S. Fifth Fleet based in Bahrain, Iran is now more likely than ever to intensify attacks on American interests through its proxies in the region, confrontations with U.S. vessels in the Gulf, and cyberattacks.
“Iran could certainly resume confrontational skirmishes with U.S. vessels and intensify attacks on oil tankers through proxy groups such as the Houthis in Yemen,” RBC’s Global Head of Commodity Strategy Helima Croft said in a client note late Tuesday.
Tehran may be bluffing on the Strait of Hormuz, but its threat already sent oil prices up. Meanwhile, it’s all but certain the regime will increase support for its regional proxies Hezbollah in Lebanon and Syria, Shia militias in Iraq, and the Houthis – exactly the behavior the Trump administration seeks to deter, which will in turn lead to more U.S. sanctions.