As we hear the devastating news about a plane being shot down in Iran as well as the assassination of Iran’s most powerful general, severe tensions between the US and Iran grow, raising fears of continued conflict as well as an all-out war. But where has this all come from?
Many incidents have contributed to this volatile situation;
- Iranian nuclear deal snub: The roots of the latest US and Iran crisis go back to 2018, when US President Donald Trump walked away from the Iranian nuclear deal, one of the signature accomplishments of his predecessor Barack Obama, and reimposed harsh sanctions on the country.
- Sanctions on other countries interactive with Iran: Mr Trump stepped up the pressure in May 2019 by applying secondary sanctions on countries that continued to do business with Iran.
- Oil tankers sabotaged: Relations further deteriorated when six oil tankers were sabotaged in the Gulf of Oman in May and June. Washington accused Iran of being behind these attacks. Iran, however denied this.
- Attacks on Saudi Oil Fields: In September, there were attacks on Saudi oil fields that the US also blamed on Iran, aggravating tensions and temporarily throwing the global oil industry into turmoil.
- Iran Attacks US Service Staff: Things really escalated in late December when an Iran-backed militia in Iraq staged attacks that resulted in the death of an American contractor and injured several US service members. The US responded with air strikes that killed dozens of the militia members, which prompted a violent protest at the US Embassy in Baghdad.
Subsequently, on 3rd January, Qasem Soleimani was killed in a US drone strike at Baghdad airport. The general who controlled Iran’s proxy forces across the Middle East was regarded as a terrorist by the Americans, who alleged he was responsible for the deaths of hundreds of American troops.
This is all extremely awful and could mean relations between the two countries go from bad to worse. But as an industry how do these aspects impact us? Lets review what the press has to say…
The Guardian has included the following statement ‘Iranian missiles could easily hit US ships in the Gulf, and any conflict would threaten global energy supplies, a senior Iranian military official has said.’
CNBC has highlighted that ‘Oil traders are under-prepared for another flare-up in U.S.-Iran tensions’ and AP News pointed to the recent changes in the stock market ‘The global benchmark for crude oil rose above $70 a barrel on Monday for the first time in over three months, with jitters rising over the escalating military tensions between Iran and the United States.’
But as highlighted by the Business Insider ‘Both Trump and Iran have a history of making serious threats without following up on them, and no one can say with certainty what happens next.’
With opinions varied we can’t really be 100% sure what will happen to our industry, we can only monitor the situation and the markets closely to see what will ensue.
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Article written by Ben Mason, Corporate Pricing Analyst