Ayatollah Ali Khamenei, Iran's supreme leader, has now warned that should the U.S. attack, Iran will strike U.S. interests around the world. In that case, what would happen to Middle Eastern oil, which flows through the Iranian-controlled Straits of Hormuz on its way out of the Persian Gulf, into the Arabian Sea, and on to world markets?
Iran might shut down the Straits of Hormuz, through which 20 percnt of Middle Eastern oil flows. Or, on the other hand, because it is so dependent on oil revenue, it might not. Nobody knows.
Beginning a year ago, Japanese oil refineries, which obtain 14 percent of their supply from Iran, began to diversify to Saudi and Kuwait crude. Japan must import literally all its oil and gas from abroad and Iran is the third largest supplier. Iran is the fourth largest supplier of oil to South Korea. China buys substantial and growing amounts of oil from Ira. Most Iranian oil exports go to Asia, followed by Europe, where major purchasers include Italy, Turkey, and France.
"When Bush announced that he would fill our Strategic Petroleum Reserve last spring and also expand it, crude prices went up by $1.50 in just 20 minutes because of speculation that the U.S. might attack Iran. If the US attacks and oil prices rise, Bush would likely release oil from the SPR to soften the blow to the oil markets," Matt Piotrowski, an oil market analyst at the Oil Daily, told Mother Jones.