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Jun 20 2019
Gulf conflict could spell disaster for world
By Li Weijian

Tensions between the United States and Iran have escalated with Washington sending 1,000 troops to the Middle East and Teheran threatening to break the limits of how much enriched uranium it can stockpile according to the multilateral Iran nuclear deal, from which the US has withdrawn. This comes on the heels of the attack on two oil tankers in the Gulf of Oman a week ago. Are the heightened tensions a prelude to war, and how will the global oil market react to the developments? Prof. Li Weijian, senior research fellow of SIIS and Prof. Ma Xiaolin from Zhejiang International Studies University share their views on the issue with China Daily's Liu Jianna. Excerpts follow:

Neither US nor Iran wants a war

Despite the escalating tensions, neither the US nor Iran intends to start, or be snared into, a war, because that would prove very costly for both. Washington, it seems, is just continuing to apply maximum pressure on Teheran in a bid to force it to concede its demands on the nuclear issue. For the Iraq war, the US deployed a total of 130,000 troops over the years, which suggests that by deploying a mere 1,000 troops the US is not thinking about launching another war in the Middle East.

Besides, Iran is not Syria, which could not respond in kind to US assaults. Thanks to Iran's ability to counterattack, not to mention its nuclear capability, the US is bound to have second thoughts on engaging Iran in a war. In fact, US President Donald Trump has made it clear he doesn't want to go into a war, although war hawks including National Security Advisor John R. Bolton seem hell-bent on triggering one.

As for Iran, which has now taken a more aggressive stance, it has not reached the stage of desperation where it has to roll the dice. Iran has made every move with an eye to exert more pressure on the other signatories to the Iran nuclear deal and solicit their support. True, the stalemate has continued for long, but a direct conflict, let alone a war, is still unlikely to break out.

As far as the attack on the tankers is concerned, there is not enough evidence to pinpoint the perpetrators. But it is almost certain that Iran is not to blame, because it does not make sense for Teheran to attack a commercial tanker at a time when it needs the support of the international community the most, especially when the Japanese prime minister was paying a state visit to Iran, the first such visit in 41 years. Moreover, equipped with the strongest intelligence network in the world, the US would have presented irrefutable evidence if indeed Iran was behind the attack.

US-Iran conflict will have big impact on oil market

The immediate task is to determine whether Iran is responsible for the attack on the oil tankers, because the evidence provided by the US is ambiguous. Besides, the possibility of the US or a third party attempting to aggravate the standoff between the US and Iran by staging the attack cannot be ruled out, nor can the possibility of a conflict or war breaking out.

Generally speaking, the US wants to avoid a war and, instead, bring Iran to its knees by using military pressure, even brinkmanship, diplomatic blockade, regional isolation and economic sanctions. But Iran will not compromise easily, as that would ruin the achievements it has made since the 1979 Iranian Revolution.

The rising tensions in the Persian Gulf will affect the international oil market, though, as shown by the hike in oil prices after the attack on the tankers. At best, the turmoil in the region will increase the transportation and insurance costs of oil. But in the worst-case scenario-a large-scale firefight and the possible blockade of Strait of Hormuz-30 percent of the global and 80 percent of Asia's oil supply will be cut off, which would raise oil prices drastically.

China is the world's largest oil importer, importing about 65 percent of the oil it consumes mainly from Middle East countries, especially the ones around the Strait of Hormuz. In a sense, both China and Japan, another big oil importer, would become victims of the region's turbulence. Hopefully, both the US and Iran will exercise restraint and ensure oil supply lines are safe and oil prices stable, as that would be in the interest of all countries.

More important, the long-term instability in the Middle East should prompt China to quicken its pace to diversify its oil imports and reduce its over-reliance on Middle East oil. And it should make more efforts to develop new energy and have a strategic petroleum reserve equal to 90 days of the previous year's net oil imports, a requirement that has already been met by countries such as the US and Japan.

Source of documents:China Daily, June 20