REPORTS FROM MARITIME FORCES AND COMMERCIAL MARITIME INTERESTS INDICATE CONCERN WITH THE POTENTIAL FOR LOCALIZED DISRUPTION TO SHIPPING IN CONJUNCTION WITH FUTURE IRANIAN NAVAL EXERCISES. DURING PREVIOUS EXERCISES IRANIAN MARITIME FORCES CONDUCTED BOARDINGS AND INSPECTIONS OF MERCHANT SHIPS, INCLUDING THOSE FLAGGED TO EUROPEAN NATIONS. THE POSSIBILITY EXISTS THAT IRAN WILL ATTEMPT TO CONDUCT BOARDINGS AND INSPECTIONS DURING EXERCISES BETWEEN DECEMBER 2011 AND MARCH 2012. THE MOST LIKELY LOCATION FOR THIS ACTIVITY WOULD BE IN THE VICINITY OF THE STRAIT OF HORMUZ, PARTICULARLY IN AREAS CLOSER TO IRANIAN TERRITORIAL WATERS.