It's back to the Eighties, with neither Iran nor US likely to blink
The spate of alleged Iranian attacks on oil ships in the Gulf of Oman has raised global fears of a return to the "Tanker Wars" of the Eighties, when US warships fought cat-and-mouse battles with Iranian forces to protect tankers.
Shipping insiders said tanker firms may be forced on to a "conflict footing" after last week's attacks sent tensions in the Gulf to their highest point since 1987, when Iraq and Iran began destroying each other's oil infrastructure.
"The industry is understandably very nervous," said Robert Meade, editor of Lloyd's List, a shipping intelligence agency. US officials have already begun discussing military options for protecting ships.
Meanwhile, Saudi Arabia, one of Iran's main regional foes and a major US ally, said last night there must be a "swift and decisive" response.
It came as fresh details emerged about conflict in recent weeks around the Strait of Hormuz. US officials claimed Iranian forces had attempted to shoot down an American drone in the Gulf shortly before beginning an attack on two tankers last Thursday. If confirmed, it would signal a willingness by Iran to directly confront the US.
Hassan Rouhani, Iran's president, yesterday repeated his threat to breach the 2015 nuclear agreement by resuming enrichment of the high-grade uranium which could be used in nuclear weapons.
Mr Rouhani has said high-grade enrichment will resume in July unless EU and Chinese signatories to the deal find a way to circumvent US sanctions and bring relief to Iran's faltering economy.
"Iran cannot stick to this agreement unilaterally," said Mr Rouhani. He did not mention the tanker incident but Iran has denied responsibility.
The Tanker Wars began in 1981 but erupted into all-out conflict three years later when Saddam Hussein's forces attacked Iranian oil tankers and Iran responded by targeting Kuwaiti tankers carrying Iraqi oil. The US eventually deployed its largest naval convoy since World War II to protect Kuwaiti oil vessels.
Mr Meade warned of a return to the era. "The industry is about as close to a conflict footing as it has ever been."
One former US diplomat said there was "more risk and uncertainty today" than in the Eighties, because the Tanker Wars were confined to the Persian Gulf, while the current asymmetric struggle between the US and Iran was playing out in Iraq, Syria, Yemen and elsewhere.
US officials believe that the message delivered by last week's attacks was: you cannot wage economic war against the Islamic Republic without paying a price.
Since quitting the global alliance and pulling the US out of the Iranian nuclear deal last year, the Trump regime has pursued a "maximum pressure" economic sanctions policy against Iran. The policy has caused real economic pain inside Tehran. Last month, Iran threatened to suspend some commitments under the deal unless the remaining signatories - the EU, Britain, France, Germany, Russia and China - help it to realise the economic benefits the deal had promised.
President Rouhani and his erudite foreign minister Javad Zarif have been working the diplomatic circuit hard in a bid to save the deal they championed. But the pair run only Iran's government. And that doesn't mean what it means in many other countries.
Iran has a three-branch government: the executive, run by Mr Rouhani, who is elected in a direct popular vote; a legislature formed of a directly elected single-house parliament; and a judiciary.
But democracy is constrained by the Guardian Council, a 12-cleric board that decides who can run for office.
And ultimate power lies with the office of the supreme leader: Ayatollah Ali Khamenei. He can fire presidents, veto laws and direct foreign and security policy. He is also the real commander in chief of both Iran's regular armed forces and the powerful Islamic Revolutionary Guard Corps.
If he had ordered a sabotage operation in the Gulf of Oman, Mr Rouhani and Mr Zarif would have been powerless to stop it. They might not even have known about it.