Saudi Gazette SECURITY Control of Abu Musa could also directly affect shipping. All of Iran's oil tanker traffic must pass through this area; making the security of the area very important. Abu Musa lies at the mouth of the narrow Strait of Hormuz, through which passes a fifth of the world's oil supplies. About 17 million barrels per day equivalent to Europe's daily consumption – pass through the mouth of the Gulf in tankers which must slow down to navigate a hairpin turn in waters 35 miles wide at the Strait's narrowest point. Any blockade of this strategic Strait would restrict supplies to consumers in Asia, Europe, and the US. Japan, which gets more than 70 percent of its oil from the Gulf, and the US, which takes 2.1 million from Middle East states, would be the most sensitive to a blockade Iranian military deployments on the island could easily be used to threaten this shipping lane. During the Tanker War in the Gulf in the 1980s, Iran made considerable use of Abu Musa. Small craft and helicopters were stationed there in order to harass tankers, and several Silkworm anti-ship missile sites were built on the island. Iran has recently purchased three Russian Kilo-class submarines, and two of these have been delivered. In addition, Iran has also purchased five Chinese-made fast-attack patrol boats of the “Huodong” class. According to Secretary of Defense Perry, these constitute “a deployment that is far beyond any reasonable defense requirements that Iran has....This can only be regarded...as a potential threat to shipping.” Iran has reportedly also intensified naval exercises over the past two to three years that included several scenarios focusing on closing the Strait, sabotaging ports and storming oil platforms and coastal targets. Iran's recent actions may not demonstrate a desire to take control of the Strait. Harold Hough, of Jane's Intelligence Review, states that “the military build-up [is] part of a greater move by Iran to spread its influence in the Arabian Gulf rather than an attempt to solidify its hold on the Strait.” Abu Musa gives Iran a base for projecting its power and influence south toward the GCC. Control of Abu Musa also gives extra protection to Bandar Abbas, an Iranian port important for its oil industry and military base. According to Hough, “If Iran wanted to deny the waterway to the US Navy, missile sites near Bandar Abbas would be more valuable since they are on the Iranian mainland and the US would be less willing to attack them for both political and military reasons.” ENVIRONMENT With oil production, the chance of environmental damage is always present, especially if the region which contains the oil resources is in dispute. At this point there is no oil production on the island of Abu Musa, although the parties are hoping that this will change in the future. Damage to the surrounding environment and animal species could be associated with oil produc tion or an oil spill. Furthermore, any future conflict over the island could inadvertently damage the oil production or resources, which would have additional devastating effects on the environment. The specific damage to the environment will be discussed in latter portions of this case study. The dispute over Abu Musa is important to many countries for several reasons. The potential oil resources on the island and in the surrounding area are valuable to the economies of both the UAE and Iran. Furthermore, the island's location could strategically be used to disrupt the world's access to oil. Currently, Iranian intentions over control of the island are unclear. This uncertainty makes the dispute unstable and it could give rise to conflict in the future. TRADE The UAE is similar to the other Arabian Gulf countries in that the oil trade has become vital to its economy. The Jebel Ali Free Zone Authority (JAFZA) in the UAE has emerged as an important trade center with the rest of the industrial world, including the oil trade. More than 21 million tons of cargo bound for Japan, the US, and Europe pass through the UAE. Although there is an embargo on Iran, it still manages to export 2.5 million barrels per day (b/d) of oil. In several cases, it is US companies that are violating the embargo; US oil companies can by and sell Iranian crude oil through overseas subsidiaries. Revenues from these subsidiaries exceed $4 billion per year. Exxon is Iran's single biggest customer; it buys 250,000
