The 16% ownership of the Joslyn Creek prospect had ERF acting like an oil sands stock, when they were going parabolic. Now COS, UTS, CLL SU are getting hit, so ERF, in response to exagerrated enthusiasm as an oil sands play, is selling down to a more reasonable yield, and could probably be bought, with stops. The truth is that this is a well-run gas Trust with the added appeal of a interest in what should be a very profitable oil sands play, so I continue to hold the stock with April 50 puts, but am reluctant to do anything, as the chart is so poor.
The Iranians could blockade the Gulf, but for how long is the question. (DIA) Director Vice Admiral Lowell E. Jacoby testified last month that
"Iran can briefly close the Strait of Hormuz, relying on a layered strategy using predominantly naval, air and some ground forces. Last year it purchased North Korean torpedo and missle-armed fast attack craft and midget submarines, making margin improvements to this capability."
The threat seems serious because he strait is only two miles wide in places. The World Tribune Com claims that "Teheran could easily block the Straits of Hormuz and use its missiles to strike tankers and GCC oil facilities, according to the new edition of Geostrategy-Direct.com. Within weeks, the rest of the world would be starving for oil and the global economy could be in danger." In fact, a blockade of the Persian Gulf has been attempted before -- by Iraq -- but went largely underreported in the pre-Internet days during the Tanker War of 1984-1987.
In 1981 Baghdad had attacked Iranian ports and oil complexes as well as neutral tankers and ships sailing to and from Iran; in 1984 Iraq expanded the socalled tanker war by using French Super-Etendard combat aircraft armed with Exocet missiles. Neutral merchant ships became favorite targets, and the long-range Super-Etendards flew sorties farther south. Seventy-one merchant ships were attacked in 1984 alone, compared with forty-eight in the first three years of the war. Iraq's motives in increasing the tempo included a desire to break the stalemate, presumably by cutting off Iran's oil exports and by thus forcing Tehran to the negotiating table. Repeated Iraqi efforts failed to put Iran's main oil exporting terminal at Khark Island out of commission, however. Iran retaliated by attacking first a Kuwaiti oil tanker near Bahrain on May 13 and then a Saudi tanker in Saudi waters five days later, making it clear that if Iraq continued to interfere with Iran's shipping, no Gulf state would be safe. These sustained attacks cut Iranian oil exports in half, reduced shipping in the Gulf by 25 percent, led Lloyd's of London to increase its insurance rates on tankers, and slowed Gulf oil supplies to the rest of the world ...
As the Tanker War spread to attacks on all shipping, the tankers were convoyed in and out the Gulf by naval vessels, resulting in one action where the FFG-7 class USS Stark was nearly sunk by a French built Exocet missile fired by an Iraqi warplane. Iran did not attack US naval vessels at the outset.
Iran refrained from attacking the United States naval force directly, but it used various forms of harassment, including mines, hit-and-run attacks by small patrol boats, and periodic stop-and-search operations. On several occasions, Tehran fired its Chinese-made Silkworm missiles on Kuwait from Al Faw Peninsula. When Iranian forces hit the reflagged tanker Sea Isle City in October 1987, Washington retaliated by destroying an oil platform in the Rostam field and by using the United States Navy's Sea, Air, and Land (SEAL) commandos to blow up a second one nearby.
Within a few weeks of the Stark incident, Iraq resumed its raids on tankers but moved its attacks farther south, near the Strait of Hormuz. Washington played a central role in framing UN Security Council Resolution 598 on the Gulf war, passed unanimously on July 20; Western attempts to isolate Iran were frustrated, however, when Tehran rejected the resolution because it did not meet its requirement that Iraq should be punished for initiating the conflict.
In early 1988, the Gulf was a crowded theater of operations. At least ten Western navies and eight regional navies were patrolling the area, the site of weekly incidents in which merchant vessels were crippled. The Arab Ship Repair Yard in Bahrain and its counterpart in Dubayy, United Arab Emirates (UAE), were unable to keep up with the repairs needed by the ships damaged in these attacks.