DUBAI // Analysts and experts say the escalating tensions between Iran and the West are not likely to result in military confrontation and will not affect the UAE.
As the war of words escalated last week, analysts said they believed Tehran mainly wants to act tough towards American and European leaders as they consider implementing the harshest sanctions yet against Iran's oil exports.
"They are saying, 'We can cause a problem in the Gulf that will increase oil prices … We're such a powerful country," said Ahmed Al Attar, an Emirati security analyst based in Abu Dhabi.
"If they attempt to try to close the strait, they will be in a lot of trouble," he said. "Just as the US has said it will intervene, the GCC cannot be expected to sit idly while its interests are threatened."
One fifth of the world's oil is estimated to pass through the international waterway at the tip of the Gulf.
Iran has threatened to block that passage if sanctions take effect. It also plans to conduct naval exercises next month centring on the waterway.
The Islamic Republic has already escalated tensions in the Gulf by test-firing two missiles during 10-day military exercises that ended this month. It also announced advances in its nuclear programme, which it says is peaceful but which western powers believe is meant to develop a weapon.
The threats have arisen as the US prepares to implement new sanctions designed to punish Iran for its nuclear programme, and as the EU plans similar steps at the end of the month, the stakes are significant.
Tough sanctions might hurt Iran's economy but would likely only have a minor spillover effect on the UAE, analysts said. The value of the Iranian rial, which has fallen 66 per cent against the dollar over the past year, could drop further, and weaken Dubai's re-export trade to Iran.
"A currency devaluation of this magnitude will hurt Dubai exports. But in the big picture it's a small hurdle for the UAE economy," said Tarek Coury, until recently a Dubai School of Government scholar. He is now the chief economist at the Qatari real estate firm Tanween.
UAE re-exports to Iran have more than doubled from 2006 to 2010 to $8bn, despite four rounds of UN sanctions and separate US measures.
In the unlikely event that Iran did try to block the strait, it could cause no more than minimal disruption, several analysts have said. The US has a dominant naval presence in the region and has vowed to ensure that the waterway stays open.
The broad scepticism about Iran's willingness and ability to act is reflected in the lack of a spike in oil prices, said Bill Farren-Price, the chief executive of the UK-based consultancy Petroleum Policy Intelligence.
"I think the market is, reasonably enough, somewhat sceptical about Iran's desire to take such an action or its ability to execute such an action," he said. "Clearly there's a lot of contingency planning going on, but I don't think it's going to be something that necessarily has more than a psychological impact."
It will soon be even harder to choke off the flow of Gulf oil. A strategic pipeline from Abu Dhabi to Fujairah, bypassing the waterway, is expected to be ready by June.
Plans call for the pipeline to have an initial capacity of 1.5 million barrels per day, which will rise to 1.8 million, enough for all of Abu Dhabi's exports.
Mr Al Attar compared Iran's actions to the North Korean practice of regularly threatening its neighbours and the US, and occasionally firing missiles, but not escalating beyond that. "It won't go as far as attacking other countries," he said. "They try to keep it low-scale."
