OIL TANKERS IN THE GULF

As we go to press, Iran's attacks on Saudi and Kuwait oil tankers are drawing closer to the Straits of Hormuz. We have previously given the technical reasons why Iran could not close the Straits of Hormuz for long, either by sinking ships, setting them ablaze or mining the straits [AtE Dec. 83].

That does not mean that the Ayatollah might not try it: His is a government without self-correcting mechanisms, which does not act logically. As we predicted, insurors have become frightened: premia, which used to amount to about 4% of operating costs, have now quadrupled for ships taking on from Iran. But the West could tide over the time of blockage fairly easily with its reserves: the US has more than 80 days' worth in its strategic petroleum reserve, and some Western countries have more than 100.

In such an event there is a danger of a sharp price rise of petroleum products, a danger that would come exclusively from the pundits clamoring for price controls. It is a policy that has proved its worth from the Roman Empire to the Nixon-Ford administration: set the price too low and you create a shortage; set it too high, and you create a glut. To accept price controls is to believe that thousands of producers and distributors with their profits at stake cannot predict the market as well as Sen. Metzenbaum's hunches. [See Prof. Fred Singer's "Our Oil Allocation Army Smells Smoke," Wall St. J., 5/25/84.]

But then there is the more dangerous and deeper level: US foreign policy based on the principle "When two crooks fight, we take the middle ground; when our ally fights off a crook, we take the middle ground, too." Two years ago, Soviet influence was practically eliminated from the Middle East, Syria's might destroyed, their mammoth arsenal of Soviet weapons in Israeli hands (billions of dollars' worth of both intelligence and research for the US). Then Reagan and Schultz went out of their way (without as much of an excuse as having to please the voters) to save the PLO and play the middle ground game, and today the situation is reversed. The sale of Stinger missiles to the Saudis shows that they have teamed nothing: The Saudi regime is less stable than the Sha's was, and the Stingers may well end up in the hands of a Saudi Ghaddaffi who is now biding his time. [More on this: M. Ledeen, "The Lessons of Lebanon," Commentary, May 1984].