Assessing the Threat

In addition to creating the web site with background information on threats to oil flows through the Strait of Hormuz, the Strauss Center project team produced an analytical report estimating the effectiveness of an Iranian attack on oil tankers. For more information on the report, please email This email address is being protected from spambots. You need JavaScript enabled to view it..

For the .pdf version of this Executive Summary, please click here.

Executive Summary

The Strait of Hormuz is a narrow waterway, about 30 miles across at its narrowest point, that connects the Arabian Gulf to the Gulf of Oman and, ultimately, to the Indian Ocean and the rest of the world. Approximately 33,000 ships traverse the Strait each year along with thousands of smaller boats. Extremely high temperatures, thick haze, and pervasive sand storms add to the less-than-ideal conditions through which maritime traffic flows.

Nearly 90% of the oil exports from the Persian Gulf transit through the Strait each day "“ generally more than 17 million barrels or almost 20% of daily worldwide oil demand. It is the only maritime passage connecting the oil-rich Gulf to the world economy.

Unfortunately, the Strait is in a neighborhood rife with political conflict. Many experts fear that an accident, terrorist attack, or military effort to "close" the narrow chokepoint could severely threaten the global economy. In particular, many politicians, pundits and analysts fear that Iran will attempt to disrupt traffic in the Strait because of recent tensions between the United States and Iran (and Israel and Iran); Iranian leaders in fact promise to close the strait if they do not get their way on certain key issues.

Should the United States truly worry about Iran "closing" the Strait of Hormuz? What does "closing" the Strait really mean? Does Iran have the military capability to back up its leaders' rhetoric? During an attack on oil flows, would the oil market truly grind to a halt, causing oil prices to skyrocket? The Hormuz Working Group, led by Robert S. Strauss Center Senior Fellow and Associate Professor Eugene Gholz, attempted to gauge the Iranian threat to energy security in the Strait of Hormuz using an analytical technique called military campaign analysis. On the surface, it seems not be in Iran's interest to cause trouble in the Strait "“ because of Iran's tremendous economic dependence on its oil trade (almost all of which goes through the Strait of Hormuz) and the looming presence of the U.S. military in the region. However, in extreme contexts, Iran might use asymmetric warfare methods to try to disrupt traffic through the Strait without fighting the powerful American forces head on. Our project did not try to assess the probability that these scenarios might come to pass but rather the likely outcome of different types of conflict in the Strait.

Based on historical patterns of use and open-source information on the Iranian arsenal, we focused on three types of weapon: small suicide boats, anti-ship cruise missiles, and naval mines. Given its limited arsenal and the constraints of trying to minimize direct combat with the American military, we assume that the Iranian operational plan would focus on the highest value targets available "“ Very Large Crude Carriers (VLCCs), which carry over two million barrels of oil each.

We considered military, economic, and political factors that would drive the disruption scenarios. We interviewed oil companies and tanker captains and met with underwriters and experts on tanker insurance to better anticipate how key oil market players would react to conflict in the Strait. We journeyed to the Arabian Gulf region to meet with military and business leaders and political analysts to learn first hand about the conflict environment. This background set the conditions for our systematic estimates of the effectiveness of Iranian military operations against VLCCs.

Our research and analysis reveals significant limits to Iran's ability to materially reduce the flow of oil through the Strait of Hormuz for a sustained period of time, even absent American or Coalition intervention to re-open the Strait. The physical characteristics of tankers make them resilient to many attacks, the designs of modern weapons are optimized for other kinds of targets, and major military operations are complex and prone to failures due to the normal "fog of war."

In our estimates that we think are most likely to be correct, we find that a large-scale Iranian campaign would yield about a 5% chance of stopping each tanker's transit with small boat suicide attacks and a roughly 12% chance of stopping each tanker's transit with volleys of anti-ship cruise missiles. The very largest minefields that we estimate that Iran could deploy in the Strait would probably seriously damage fewer than ten VLCCs during the entire life of the minefield "“ fewer than the number of tankers that typically traverse the Strait in a single day. And the cumulative effect of the various types of attacks would be unlikely to severely reduce the flow of oil to the global market. Moreover, even our "conservative case" estimates that bias all of our assumptions strongly in Iran's favor do not suggest that Iran could readily cripple the oil supply.

Meanwhile, market forces will work to continue the flow of oil in and out of the Strait. After pausing to assess the situation, insurance underwriters and tanker charters will almost certainly re-enter the market: they know how to appropriately price tanker insurance to account for risk, and even a substantial increase in insurance premiums and transportation costs would have a small percentage effect on the consumer price of oil. The possibility of tapping the world's multi-billion barrel oil stockpiles also helps insulate the world's oil supply from most plausible disruptions.

While there is a clear role for the United States military in protecting the freedom of the seas and contributing to energy security, the threat in the Strait of Hormuz is not so dire that U.S. forces need to take a "hair-trigger" posture. The U.S. propensity to overreact offers excessive leverage to Iran and terrorists, who may count on the immediate U.S. reaction as part of their strategies in the Strait. Nervous investors' tendency to panic "“ causing sudden, unnecessary surges in the price of oil "“ cost consumers a great deal and threaten global prosperity. The United States should try to counter panic not with rapid escalation but with efforts to differentiate serious threats "“ times when the world really should fear "“ from exaggeration. One straightforward way to defeat asymmetric attacks on American national interests is to explain the limits of Iranian military capability to the public, especially to participants in oil markets.

This page last modified in August 2008