Iran has rejected UK plans to coordinate a European force to protect shipping in the Strait of Hormuz, with the country's President Hassan Rouhani saying Wednesday his country will not allow any shipping disruptions in the key waterway.
Rouhani, who defended the seizure of a British oil tanker on Friday and thanked the country's elite army Islamic Revolution Guards Corps for the commando operation, said that Iran will protect the critical oil transit route.
"[Safeguarding shipping in the region] is not a foreign country business... therefore the Revolutionary Guards seized this British ship bravelyand powerfully because they rejected all the commands and regulations," he added. "And we again announce that we will not allow anyone to commit disorder in the Persian Gulf and Strait of Hormuz," Rouhani said in a weekly cabinet meeting according to a report on Iranian State TV, adding that Iran and its neighbors are responsible for protecting this key waterway.
The UK is attempting to build a European-led force protecting free navigation in the Strait of Hormuz while the US has been sending mixed signals on this.
Iran has previously issued threats to close or disrupt traffic through the Strait of Hormuz, should the US sanctions block its oil shipments. The Strait of Hormuz is a critical chokepoint through which 30% of the world's seaborne oil transits.
The detention of the British Stena Impero by the Revolution Guards Friday came more than two weeks after a Panamanian-flagged tanker Grace 1 which was carrying Iran's oil, was seized by Gibraltar authorities for violation of EU sanctions that ban oil supply to Syria, which was allegedly the ship's destination. Iran however denied that the oil was heading to Syria.
"The Strait of Hormuz...is not a place to joke around, neither is it a place where a country violates international maritime laws," Rouhani said.
STRAIT SECURITY
The incidents have prompted the West to re-assess security for shipping in the Persian Gulf region.
This week US President Donald Trump questioned the US role protecting oil shipments through the Strait of Hormuz, arguing that the expensive military presence benefits "very rich" Middle East exporters and Asian importers when the US no longer needs the oil.
But the US Department of Defense and State Department have for weeks been trying to build a coalition called Operation Sentinel to share the burden of protecting the waterway.
Analysts expect the Washington-Tehran standoff to escalate unless the US decides to grant sanction waivers to some of Iran's key oil buyers.
"While both the White House and Iranian leadership insist they do not want a war, we maintain that there remain several redlines that if crossed could be a catalyst for a military Conflict," RBC Capital Market said in a recent note. "The White House seems reluctant to frontload any economic concessions to kick start diplomatic talks, thus we see no end to the cycle of escalation in the near-term.
US energy consultancy Rapidan Energy has insisted that Iran has the means and ability to conduct a series of intermittent but continuing attacks on shipping in the region could interrupt safe transit of oil for many weeks, if not longer.
"Gulf disruptions are very bad news for refiners, especially complex ones hit by the double whammy of a massive squeeze on medium and heavy barrels and a demand crunch from consumers reeling from price spikes," said Rapidan in in recent report, which looked at scenarios entailing a large disruption of oil flow through the Strait.
Ship operators in the region have been on high alert and insurance rates have soared since tanker attacks in May and June. The US has blamed Iran for the attacks, although Iran denies responsibility.
About 17.3 million b/d of crude oil and 3.3 million b/d of refined products flowed through the strait last year, or the equivalent of about 21%of global petroleum liquids consumption, according to the US Energy Information Administration.
