* Iran cannot afford prolonged blockade of strait
* Oil could rise to $100 a barrel if waterway blocked
By Jonathan Saul and David Sheppard
LONDON, Jan 7 (Reuters) - Iran is unlikely to risk blocking
or mining the Strait of Hormuz if tension with the West rises,
because it stands to lose vital oil revenues from closing the
strategic waterway and lacks the military capability.
Iran has threatened to close the strait a vital route for
world oil supplies, if it is attacked over its nuclear
ambitions.
Some Iran watchers say Tehran could opt to block the strait
if more severe sanctions are imposed. Western powers suspect
Iran's nuclear activities are aimed at developing atomic
weapons, not generating electricity as Tehran insists.
Analysts believe the threat itself is enough to raise oil
prices to well above $100 a barrel, potentially damaging a still
fragile global economic recovery.
"Oil prices rose by around $12 a barrel when Israel went
into Lebanon in 2006 and neither of those countries are even
involved in oil production," said Paul Harris, head of natural
resources risk management at Bank of Ireland.
"You'd be looking at least double that kind of jump from an
event on that scale in the region."
Many analysts say Tehran cannot afford to risk a prolonged
disruption of the narrow waterway, which borders Iran's
coastline at the mouth of the Gulf, and through which 40 percent
of all seaborne oil trade, about 17 million barrels, passes
daily.
Iran itself exports around 2.4 million barrels daily -- most
of it via the Strait of Hormuz.
"They would cut their own throats because two-thirds of the
Iranian government's budget comes from exports from the same
strait," said J. Peter Pham, an adviser on strategic matters to
U.S. and foreign governments.
"Iran gains more from the threat of closing the strait than
actually closing it."
"FRAUGHT WITH PROBLEMS"
The strait, just 21 miles wide at its narrowest point, lies
between Oman and Iran. Neighbouring oil-producing countries,
including Saudi Arabia, the world's largest crude oil exporter,
are dependent on its shipping lanes.
"Closing the strait would reduce Iran's leverage in the
region as it would put Persian Gulf countries squarely in the
camp of America," Iran analyst Meir Javedanfar said, adding that
it could tempt them into financing Iranian opposition movements.
Many analysts believe that, if Iran retaliated, it would
choose to mine the strait's sea lanes as it did during the
Iran-Iraq war in the 1980s.
Military analysts believe Iran has three mine-laying ships
and three mine-laying helicopters, plus three Russian-built Kilo
class submarines.
"Military operations on the offence are fraught with
problems," said Eugene Gholz, professor of national security
policy at the University of Texas.
"The Iranians would have to do it over and over again every
day to maintain the disruption."
Global intelligence company Stratfor said the strait's
cramped, shallow waters made submarine activity difficult.
"In any event, the Iranian navy does not have enough Kilos
to have any confidence in its ability to sustain submarine
operations for any meaningful period after hostilities began,"
it said in a study.
REVOLUTIONARY GUARDS
Some analysts said double-hulled oil tankers were able to
withstand damage from mines more than their single-hulled
predecessors, which were targeted in the 1980s when Iran and
Iraq fired on each other's vessels during the "tanker war".
John Dalby, chief executive of the maritime security company
MRM which provides risk assessments and supplies former military
personnel to ships in the region, said mines did not represent a
real risk to tankers.
"Bearing in mind mines detonate under water, there is little
risk of a spark-induced explosion," he said.
Pham said Iran would have to sink three or four very large
crude carriers daily, each holding up to 2 million barrels of
oil, to have a significant effect on supply.
"This is nearly impossible," he said. "They can cause a
shock, they can cause psychological panic, but their actual
capacity to do something is not there."
Military analysts have not ruled out Iran using speedboats
to attack tanker traffic.
The U.S. Office of Naval Intelligence said in a study last
year Iran's Revolutionary Guards had control of smaller and
faster boats which had "serious firepower" including torpedoes
and the Iranian-made Kowsar anti-ship cruise missiles.
However, few believe Iran will take that course because of
fears of severe retaliation by the West, given that the U.S.
Fifth Fleet is based in the region.
"That would be far too provocative. It would unleash hell,"
MRM's Dalby said.
(Editing by Andrew Dobbie)
