As for the current concern about Iranian production, the energy analyst says consumers of Iranian crude are seeking alternatives, which helps explains crude’s surge at the end of 2011. But the idea that Iran will close the Strait of Hormuz in response to U.S. sanctions and Israeli provocations “can’t happen,” he says, citing the size of the channel, which is over 30 miles wide at its narrowest point.
“You need a gazillion boats to close that off [and] it would be suicidal if the Iranian Navy picked a fight with the U.S. Navy,” Stuart says. “A closure of the Strait of Hormuz is not an issue. What is an issue is tightening sanctions on Iran and Iran’s looming difficulty in selling its oil.”
Jan Stuart, head of energy research at Credit Suisse.