war games- I can't say who may win but I can guess who shall lose !

http://globaleconomicanalysis.blogspot.com/2012/01/iran-starts-uranium-enrichment-joint.html

Roughly 17 million barrels of crude a day flow through the Strait of Hormuz and Iran has threatened to block the strait if Europe imposes economic sanctions. How credible is that threat?

Joint Chiefs of Staff says Iran Has Ability to Block Strait of Hormuz

Please consider Iran Has Ability to Block Strait of Hormuz, U.S. General Dempsey Tells CBS

Iran has the ability to block the Strait of Hormuz “for a period of time,” and the U.S. would take action to reopen it, Joint Chiefs of Staff chairman General Martin Dempsey said.

“They’ve invested in capabilities that could, in fact, for a period of time block the Strait of Hormuz,” Dempsey said in an interview airing today on the CBS “Face the Nation” program. “We’ve invested in capabilities to ensure that if that happens, we can defeat that.”

Should Iran try to close Hormuz, the U.S. “would take action and reopen” the waterway, said Dempsey, President Barack Obama’s top military adviser. 

Republican presidential candidate Rick Santorum said Jan. 1 on NBC’s “Meet the Press” that he would use air strikes against Iran unless the country dismantled its nuclear program or allowed inspectors to verify that the work isn’t aimed at making a weapon.

Dempsey suggested that curbing Iran’s nuclear work by bombing its facilities would be difficult.

“I’d rather not discuss the degree of difficulty and in any way encourage them to read anything into that,” Dempsey said. “My responsibility is to encourage the right degree of planning, to understand the risks associated with any kind of military option.”

Iran Starts Uranium Enrichment at Fordo Mountain Facility

Bloomberg reports Iran Starts Uranium Enrichment at Fordo Mountain Facility

Iran has started to enrich uranium at its Fordo production facility, the official Kayhan newspaper reported without saying where it got the information.

Iran will soon have a ceremony to open the site officially, the newspaper reported, citing the head of the Iranian Atomic Energy Organization, Fereydoun Abbasi. The Iranian nuclear chief was cited yesterday by Mehr News as saying that the underground facility “will start operating in the near future.”

The existence of the Fordo plant, built into the side of a mountain near the Muslim holy city of Qom, south of Tehran, was disclosed in September 2009, heightening concern among the U.S. and its allies who say Iran’s activities may be a cover for the development of atomic weapons. The Persian Gulf country has rejected the allegation, saying it needs nuclear technology to secure energy for its growing population.

Iran has pressed ahead with its nuclear program even as international pressure increases to prevent the Islamic republic from building an atomic weapon.

The U.S. tightened economic sanctions against Iran over its nuclear program on Dec. 31, and the European Union is weighing a ban later this month on purchases of Iranian crude.

Iran threatened last month to shut the Strait of Hormuz, a transit point for a fifth of oil traded worldwide, if sanctions are imposed on its crude exports in response to its nuclear program.

Hormuz Bypass Oil Pipeline Delayed

United Arab Emirates has been working on an oil pipeline so that its oil will not have to flow through the Strait of Hormuz. Bloomberg reports theHormuz Bypass Oil Pipeline Delayed as Iranian Tensions Mount

A pipeline that would allow oil from the United Arab Emirates to bypass the Strait of Hormuz separating it from Iran has been delayed because of construction difficulties, two people with knowledge of the matter said.

As many as 270 construction issues have pushed back the completion date, said the two people, declining to be identified because they’re not allowed to speak publicly on the matter. The $3.3 billion project won’t be ready until at least April, one of them said. Abu Dhabi, holder of most of the U.A.E.’s oil reserves, had planned to start exports in January 2011 through the pipeline to a port outside the strait, Dieter Blauberg, the project’s former director, said in May 2009.

The 1.5 million barrel-a-day link would ensure the U.A.E. can export crude without risking a blockade at Hormuz, where fully laden tankers exit the Persian Gulf with one-fifth of the world’s traded oil. The chance that Iran might try to close the waterway has intensified as Europe prepares to follow tougher U.S. sanctions on the country.

“That pipeline would carry pretty much all of Abu Dhabi’s oil,” Robin Mills, an analyst at Manaar Energy Consulting in Dubai, said Jan. 5. “It’s a critical bit of infrastructure, and it is remarkable it hasn’t been completed.”

Weeks of Iran tension has added about $10 a barrel to Brent crude prices, said al-Harami, who was head of crude and products marketing at state-run Kuwait Petroleum Corp. during the 1980s “Tanker War,” when Iran and Iraq attacked each other’s ships.

Still, a closure of the strait by Iran, in response to opposition to the nation’s nuclear program, is not a “high- likelihood event,” David Fyfe, head of the International Energy Agency’s oil market and industry division, said in a Jan. 4 phone interview from Paris.

War posturing by Iran and the US, as well as economic sanctions by Europe are counterproductive and have undoubtedly increased the price of oil. The simple solution to this mess would be for Iran to admit inspectors to check their facilities and for the US to go along with those inspections.
However, the US has demanded Iran stop all enrichment. The US has no fundamental right to demand that Iran stop enrichment for non-weapons usage.

As an aside , Mish added an additional note delineating the history of the Iranian nuclear program - check it when you get a moment !