Lots Of Xs Vs Lots Of Ys
US vs. Iran: The media today talk of a “90% chance of war” and “as soon as Saturday.” We’ve long stressed there’s a high likelihood of a fresh US-Iran conflict, recent US logistics movements said soon, and an Axios headline yesterday refocused oil markets on it. The balance of risks now tilts to a US strike after market close Friday, even if the materiel moved to the Middle East suggests any attack is likely to last weeks rather than being over by the Monday open. One caveat is Secretary of State Rubio is set to meet with PM Netanyahu in Israel on February 28, hard to achieve if missiles are flying. Yet Israel is preparing for exactly that. Indeed, expectations are Iran will retaliate across the region, potentially via terror cells in the West (including in Europe), and perhaps in Hormuz directly if the regime sees itself as at risk. The broader region is flammable too, with tensions running: Egypt vs Ethiopia vs Eritrea; Somalia vs Somaliland; Sudan vs South Sudan; Yemen vs South Yemen; and the Saudis (and Turkey and nuclear-armed Pakistan) vs the UAE (and Israel and nuclear-armed India).
To say that this could be market- and geopolitics-moving is an understatement. Oil, and presumably LNG, prices would spike. How quickly they come down would depend on exactly how this plays out. The US must be confident that it has a plan in place to mitigate these kinds of risks. It certainly did, in a much less risky environment, in Venezuela.
Also Read : Iran Will Be “Finding Out” Over the Next 10 Days, Trump Says, but Asserts “Good Talks”
