By Quincey Klein

People Editor

            U.S. legislation to be enacted later this year was passed to penalize American businesses that perform transactions with Iran’s central bank. This makes it more difficult for American businesses to purchase Iranian oil. Iran responded by threatening to close the Strait of Hormuz, the oil industry’s principle gateway for oil and stage war games. The reason for these new sanctions against Iran’s central banks is an effort damages its funds, as Iran is posing a potential threat with their nuclear developments.

            These actions create further tension after Iran accused the CIA for being responsible for the assassination of an Iranian nuclear scientist in Tehran earlier this month. The U.S. denies any involvement in this act. Even though the scientist was “replaceable,” as stated by former weapons inspector David Albright, it continued the strain on the relationship between the American and Iranian governments.

            Iran claims its nuclear ambitions are purely for peaceful civilian purposes, such as creating isotopes for cancer patients and generating an alternate energy instead of oil. However, Israel, the US, and their European allies are wary, and want to charge Iran with intentions to create nuclear weapons.

 This potential threat is causing European countries to consider following in the same vein as the U.S., by outlawing transactions with the Iranian central bank. OPEC governor Mohammed Ali Khatibi argued “Regarding the economic crisis in the Eurozone, imposing any sanction on Iran's oil will push European countries into a deeper crisis," meaning it would be fiscally irresponsible for nations to challenge transactions with Iran.

Closing the strait would not only harm all the countries that rely on Mideast oil by raising prices, but also cut Iran off from foreign income, as oil generates approximately 80 percent of the country’s revenue with over 11 million barrels of oil exported in 2011 through the Strait of Hormuz.

In response to the proposed blockade, Saudi Arabia, a competitive rival of Iran in regional affairs and fellow oil giant, stated that they would be able to make up for any oil shortages caused by the Iranian threats. This lessens the severity of threats to cut off the Strait of Hormuz, displeasing the Iranian government.

(Sources: nytimes.com, cbs.com)