One half of the Saudi oil production has been shut down after a drone attack on oil shipment sites in Saudi Arabia. The Iranian-controlled Houthi rebels in Yemen have claimed responsibility for the attack, but it's doubtful that they actually carried it out. The USA has blamed Iran. One way or another, that's correct. Consider these facts:
1. The sites struck are much closer to Iran than to Yemen. While it is not impossible for drones to fly to the site from Yemen, it would be much more difficult to achieve that feat than to fly them over the Persian Gulf from Iran to Saudi Arabia. There are also many targets much closer to Yemen that the Houthis could have hit with a similar effect.
2. The Houthis are not technologically advanced. Here too, the Iranians have the skill set to make this attack while the Houthis really don't.
3. The Iranians control the Houthis. In other words, even if the attack actually came all the way from Yemen, the Houthis wouldn't have launched such an attack without an express approval from Iran.
4. Iran has been trying to pressure the USA prior to next week's possible meeting between the Iranian prime minister and president Trump at the UN General Assembly in New York. They want to force President Trump to relax the sanctions placed on Iran.
The Iranian response to the statement by Secretary of State Pompeo that the USA places responsibility for the attack on Iran by saying that since the US plan for "maximum pressure" has failed, the US has switched to "maximum lies." Iran also said that it was ready for war.
The reality, however, certainly appears to be that Iran is the true culprit here. Iran also seems to think that it is still dealing with president Obama. They expect the USA to back off on the sanctions when faced with the possibility of concerted attacks from Iran or even war. It's a very high stakes gamble.
I think that Iran doesn't understand President Trump. Trump is, by his own terms, a "counter-puncher". If he is convinced that Iran is responsible for the drone attack, he will understand that the Saudis were only one target of Iran. The other major target is the USA. He won't relax the pressure on Iran moving forward in response to this attack. Indeed, it would not surprise me to see an American retaliatory strike on Iranian targets in the next few days. That response will likely come after the UN General Assembly meeting this week, but Trump could order it sooner. Note that there could also be a major Saudi counter strike instead of an American one.
The big issue for me is just how Iran will react to a counter strike. The Iranians have to know that they would get wiped out in a war with the USA and its Middle Eastern allies. The future of the Islamic Republic is at stake. The Ayatollah has never been willing to risk that future. I don't think he will be willing to do that now either. Indeed, my guess is that after a lot of bluster, Iran would pull back following a counter strike. There will be no all out war.
One wild card in the mix is the Israeli reaction. There is an Israeli general election on Tuesday. Almost certainly, the Israelis will take no action prior to that time. Still, the Iranian attack makes the neighborhood much more dangerous, and it strengthens the electoral prospects of the governing Likud party. Iran may have just succeeded in re-electing Netanyahu as prime minister, someone who is an ardent opponent of Iran. If Netanyahu does win re-election, he may try to use the current situation to take action against the Iranian nuclear sites. The Saudis may be willing to let Israeli planes use Saudi airspace or even bases for an attack on Iran's nuclear sites. It would be a high stakes gamble, and the Israelis might carry out such an attack in concert with the Saudis but without approval of the USA. One never knows. If that attack comes and is successful, then the likelihood of war in the region increases. Such an attack would also up the prospect of war (although not by as much) should an Israeli attack fail.
We also can't forget the impact of all this in Europe, China and Japan. Just a few days ago, French president Macron offered to pay the Iranians in "aid" so that they will adhere to the Iranian nuclear deal. Iran did not accept. This latest attack, however, is going to raise the price of gasoline and other petroleum products rather rapidly across Europe by 20% or more. Given that the European economies were very weak, Europe could easily sink into a recession as a result. We may finally have reached the point where the European leaders feel compelled to confront the Iranians.
China is also in a weak economic position at the moment. Growth has slowed in dramatic fashion. China gets a big percentage of its oil from the Gulf. Japan does too. They have a stake in stopping Iranian attacks of this sort.
Strangely, the rise in the price of oil and the reduction in the supply will benefit the USA the most and harm it the least. America is now exporting oil. We will get the benefit of the price rise. We are also exporting liquefied natural gas. This alternative fuel will become much more attractive as the price of oil pushes up. There will likely be domestic rises in the price of gasoline, but not by all that much most likely.
Iran has placed a very big bet with this attack. Given the situation around the world, however, it looks like a losing gamble, a very big loss indeed.
1. The sites struck are much closer to Iran than to Yemen. While it is not impossible for drones to fly to the site from Yemen, it would be much more difficult to achieve that feat than to fly them over the Persian Gulf from Iran to Saudi Arabia. There are also many targets much closer to Yemen that the Houthis could have hit with a similar effect.
2. The Houthis are not technologically advanced. Here too, the Iranians have the skill set to make this attack while the Houthis really don't.
3. The Iranians control the Houthis. In other words, even if the attack actually came all the way from Yemen, the Houthis wouldn't have launched such an attack without an express approval from Iran.
4. Iran has been trying to pressure the USA prior to next week's possible meeting between the Iranian prime minister and president Trump at the UN General Assembly in New York. They want to force President Trump to relax the sanctions placed on Iran.
The Iranian response to the statement by Secretary of State Pompeo that the USA places responsibility for the attack on Iran by saying that since the US plan for "maximum pressure" has failed, the US has switched to "maximum lies." Iran also said that it was ready for war.
The reality, however, certainly appears to be that Iran is the true culprit here. Iran also seems to think that it is still dealing with president Obama. They expect the USA to back off on the sanctions when faced with the possibility of concerted attacks from Iran or even war. It's a very high stakes gamble.
I think that Iran doesn't understand President Trump. Trump is, by his own terms, a "counter-puncher". If he is convinced that Iran is responsible for the drone attack, he will understand that the Saudis were only one target of Iran. The other major target is the USA. He won't relax the pressure on Iran moving forward in response to this attack. Indeed, it would not surprise me to see an American retaliatory strike on Iranian targets in the next few days. That response will likely come after the UN General Assembly meeting this week, but Trump could order it sooner. Note that there could also be a major Saudi counter strike instead of an American one.
The big issue for me is just how Iran will react to a counter strike. The Iranians have to know that they would get wiped out in a war with the USA and its Middle Eastern allies. The future of the Islamic Republic is at stake. The Ayatollah has never been willing to risk that future. I don't think he will be willing to do that now either. Indeed, my guess is that after a lot of bluster, Iran would pull back following a counter strike. There will be no all out war.
One wild card in the mix is the Israeli reaction. There is an Israeli general election on Tuesday. Almost certainly, the Israelis will take no action prior to that time. Still, the Iranian attack makes the neighborhood much more dangerous, and it strengthens the electoral prospects of the governing Likud party. Iran may have just succeeded in re-electing Netanyahu as prime minister, someone who is an ardent opponent of Iran. If Netanyahu does win re-election, he may try to use the current situation to take action against the Iranian nuclear sites. The Saudis may be willing to let Israeli planes use Saudi airspace or even bases for an attack on Iran's nuclear sites. It would be a high stakes gamble, and the Israelis might carry out such an attack in concert with the Saudis but without approval of the USA. One never knows. If that attack comes and is successful, then the likelihood of war in the region increases. Such an attack would also up the prospect of war (although not by as much) should an Israeli attack fail.
We also can't forget the impact of all this in Europe, China and Japan. Just a few days ago, French president Macron offered to pay the Iranians in "aid" so that they will adhere to the Iranian nuclear deal. Iran did not accept. This latest attack, however, is going to raise the price of gasoline and other petroleum products rather rapidly across Europe by 20% or more. Given that the European economies were very weak, Europe could easily sink into a recession as a result. We may finally have reached the point where the European leaders feel compelled to confront the Iranians.
China is also in a weak economic position at the moment. Growth has slowed in dramatic fashion. China gets a big percentage of its oil from the Gulf. Japan does too. They have a stake in stopping Iranian attacks of this sort.
Strangely, the rise in the price of oil and the reduction in the supply will benefit the USA the most and harm it the least. America is now exporting oil. We will get the benefit of the price rise. We are also exporting liquefied natural gas. This alternative fuel will become much more attractive as the price of oil pushes up. There will likely be domestic rises in the price of gasoline, but not by all that much most likely.
Iran has placed a very big bet with this attack. Given the situation around the world, however, it looks like a losing gamble, a very big loss indeed.
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