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U.S. And Iran Trade Threats Over Oil Exports, Persian Gulf Shipping Lane

Jul 5, 2018
Originally published on July 5, 2018 5:58 am
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STEVE INSKEEP, HOST:

Some remarks from Iran have raised the stakes. After pulling out of a nuclear agreement, President Trump's administration is trying to isolate Iran and cut off its oil exports. Iran's president, Hassan Rouhani, has begun talking of consequences for the United States and the world. And that's being taken in some quarters as a threat to block the Strait of Hormuz. Look at a map. And you see that oil tankers leaving the Persian Gulf from several nations pass through that narrow strait - right past the Iranian seashore. NPR's Peter Kenyon is following developments from Istanbul. Hey there, Peter.

PETER KENYON, BYLINE: Hi, Steve.

INSKEEP: Would you give us a little more here? Why would the Strait of Hormuz be so sensitive?

KENYON: Right, classic shipping chokepoint - probably the most important oil and gas chokepoint in the world. It's a narrow body of water off Iran. It leads from the Persian Gulf towards the Arabian Sea. Something like 17 million barrels of the world's oil goes through it every day...

INSKEEP: Wow.

KENYON: ...From Saudi Arabia, the UAE, Bahrain, Qatar, Iraq. The Iranian and American Navies have been there in clashes especially - back during the Iran-Iraq war. There was a mine that hit a U.S. ship. And then later on, the USS Vincennes shot down an Iranian passenger jet. Two-hundred-ninety civilians killed because the Vincennes mistook it for a fighter jet. The Iranians just marked the anniversary of that tragedy the other day.

INSKEEP: Wow - so lots of tension there, lots of history. But is this a real threat by the Iranians to block it?

KENYON: So far, it remains at the rhetorical stages. But President Rouhani, visiting Europe, said it would be meaningless for other states to be able to export oil and gas if Iran cannot. And that's why some are seeing this as a threat to block the Strait of Hormuz. And these tensions, as we mentioned, aren't new. So it's something that people are very much worried about.

INSKEEP: So there's this broader backdrop. The United States pulled out of a nuclear deal. Other nations that were in the deal remain in the deal and want to figure out ways to continue trading with Iran however much the U.S. may dislike it. How are the Europeans - in particular, European-leading nations doing at keeping trade going with Iran?

KENYON: We might find that out tomorrow. The question at the moment is whether Europe can put together some kind of package of economic guarantees that would convince Tehran that it's worth staying in the deal even without the U.S. And this is no easy task. The U.S. is a huge economy. And some big companies have already indicated they will stop doing business in Iran if these sanctions come back. This meeting is happening tomorrow in Vienna. Iran will get a look over the European proposal. And that might tell us whether they've managed to come up with something that might actually work or whether they're going to consider their own options.

INSKEEP: OK. So suppose the Europeans do not manage to come up with guarantees sufficient enough to persuade Iran to stay in the deal.

KENYON: Well, there's a couple of routes they can take. Tehran's already said it wants to trigger a dispute mechanism under the nuclear accord. That would involve charging the U.S. with violating the deal. That's a relatively minor step it could take. More crucially, Iran could start looking at its own nuclear program again. It's reduced that a lot under the deal. It could stop cooperating with these U.N. nuclear inspectors who come in on a regular basis. It could ramp up its nuclear activities that it halted under the agreement. That would increase tensions with Washington further. Iran's already said it's got the groundwork laid to swiftly ramp up its enrichment if need be. And so the Trump administration is trying to keep pressure on Iran. And if Iran abandons the deal, things will escalate quickly.

INSKEEP: Well, if the inspectors went out, that would be an immediate destabilizing step, I guess.

KENYON: Very big deal.

INSKEEP: Peter, thanks very much as always.

KENYON: Thanks, Steve.

INSKEEP: NPR's Peter Kenyon covers Iran for us. He is in Istanbul today.

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