Reports of a drone attack against Saudi oil refineries over the weekend sent the price of Brent oil futures up to $68.22 on Monday. Where it goes from there heavily depends on what happens next.
Analysts say that a persistent outage of the Saudi facilities could bring the price up to $75, and that any military response could bring it to $85. They added that a full-scale war in the region could easily bring the price up to $100 a barrel.
President Trump dismissed the whole issue, Tweeting “PLENTY OF OIL!!!” over the weekend and since insisting that he doesn’t consider the latest price increase a problem at all.
As a more practical measure, Trump announced that he has authorized the release of oil from the US Strategic Petroleum Reserve in a “to-be-determined amount.” Trump has insisted that he doesn’t want war, which suggests that the worst-case scenario types of war are unlikely.
“Trump has insisted that he doesn’t want war, which suggests that the worst-case scenario types of war are unlikely.”
Read: “I’m so desperate about my inability to prevent a war that I assume it can’t happen.”
War with Iran is inevitable. If not sooner, than later. The US has talked itself into a corner.
The immediate war scenario might be avoided for only two reasons:
1) Israel may prevail on the US not to start the war due to the threat from Hezbollah in Iran. However, Israel may also prevail on the US to join it in attacking Hezbollah before the Iran war. So this won’t help the regional situation.
2) The Houthis decide not to do another such strike because of the risk of regional war between the US and Iran. However, since Saudi Arabia and its oil and military facilities would be targets of Iran missiles, the Houthis may calculate that the best way to get Saudi Arabia off Yemen’s back is to lure Saudi Arabia and the US into a war with Iran.
How this would play with their Iranian backers – who don’t want a war with the US over Houthi activity – is unclear. If I were the Houthis, I would be mostly concerned about my own situation even if it threatened whatever support Iran is giving.
Bottom line: War with Iran is going to happen, despite the obvious cognitive dissonance reflected in the sentence quoted above.