Iran Threatens US Navy Aircraft Carrier Battle Group

As new sanctions hit their economy Iran threatened Tuesday to take action if the U.S. Navy moves an aircraft carrier into the Gulf. This is Tehran’s most aggressive statement yet after weeks of saber-rattling as new U.S. and EU financial sanctions take an increasing toll on its economy.

New Financial Sanctions Will Cripple Iranian Economy

The new sanctions by the US and EU are designed to cut off from the American financial system any bank or central bank which conducts business with Iran’s central bank. As Iran uses it central bank to collect payment for Iranian oil shipments the implementation of the sanctions would drastically effect Iran’s ability to sell and be paid for oil that it sells on world markets.

If the sanctions are actually carried out against Iran they would drastically affect Iran’s cash flow. Just the threat of the sanctions being used has already caused Iran severe problems at home. There are reports that huge lines have formed at banks as Iranian savers atempt to purchase dollars and withdraw their money from Iranian banks to purchase gold and silver or other commodities and goods that they think will protect them from the collapse of the Rial currency.

Economic Conditions Within Iran Now Rapidly Deteriorating

The Rial has already fallen in value by 40% against the dollar over the past few weeks. Prices of just about everything, especially food and other necessities, have soared as Iranians try to convert their depreciating currency into staple goods before the next round of price increases occur. It appears that Iran is in the early stages of a hyperinflation event.

Army chief Ataollah Salehi said the United States had moved an aircraft carrier out of the Persian Gulf because of Iran’s naval war game exercises. He said Iran would take action if the ship returned.

“Iran will not repeat its warning … the enemy’s carrier has been moved to the Sea of Oman because of our drill. I recommend and emphasize to the American carrier not to return to the Persian Gulf,” army chief Salehi said.

“I advise, recommend and warn them over the return of this carrier to the Persian Gulf because we are not in the habit of warning more than once.”

Military experts still say they do not expect Tehran to aggressively commit an act of war – the U.S. Navy has far superior firepower than Iran’s sea forces – but Iran is running out of diplomatic maneuvering room to avert a confrontation.

“I think we should be very worried because the diplomacy that should accompany this rise in tension seems to be lacking on both sides,” said Richard Dalton, former British ambassador to Iran and now an associate fellow at Chatham House think tank.

“I don’t believe either side wants a war to start. I think the Iranians will be aware that if they block the Strait or attack a U.S. ship, they will be the losers. Nor do I think that the U.S. wants to use its military might other than as a means of pressure. However, in a state of heightened emotion on both sides, we are in a dangerous situation.”

The real danger is that a shooting war could easily get underway through a miscalculation or mistake on either side. For example, the United States Navy may decide to show Iran who’s really the boss of the sea lanes in the region by moving an aircraft carrier battle group back into the Persian Gulf.

The Iranians, under severe stress and backed into a corner by the new financial sanctions, may decide to show the U.S. Navy that it does have some muscle behind its threats by firing missiles at the aircraft carrier battle group. Any Iranian action against the U.S. Navy would quickly escalate into what could be a very nasty war, one that could spread throughout the region.

Increased tensions in the region have already affected the price of crude oil. Brent crude futures were up more than four dollars Tuesday afternoon in London, pushing above $111 a barrel on the news of potential threats to supply in the Gulf and the potential closing by Iran of the Strait of Hormuz.

Should war between Iran and the US occur the price of oil could easily double from current levels. This would be a tremendous blow to the world economy.