This is a direct upside risk for oil. A renewed US campaign against Iran would revive the threat of Iranian retaliation against Gulf energy facilities, shipping and infrastructure, which Iran has already shown it is willing to target. With Brent already around $115, the Houthi refinery claim adding to supply nerves and OPEC+ unlikely to add barrels on Sunday, a risk premium could build in the days before the November 3 midterms. Freight and insurance costs for Gulf shipping are also exposed. The inflation consequences extend well beyond the region: higher crude would add to the pressure that the RBA flagged today and complicate Fed policy. Safe-haven flows into the dollar are possible. Gold has tended to fall on escalation as rate expectations rise.
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Washington is quietly telling Gulf allies to brace for a post-midterms strike on Iran, and with Tehran promising to hit back at energy targets, oil markets have six days to price the risk.
Summary:
The US told several Gulf Arab states to prepare for a possible short, intense military campaign against Iran after the November 3 midterms, The Wall Street Journal ( gated ) reported.
Trump is leaning toward a large strike on Iranian infrastructure and nuclear sites but has not decided, according to people familiar with his thinking.
The US is moving a Patriot system to the region, restocking munitions and adding a carrier strike group to roughly 20 warships already deployed. Israel has also prepared strike plans.
The White House declined to comment on military plans and said all options remain on the table to stop Iran getting a nuclear weapon.
Iran has warned it would hit economic and civilian targets across the region, and retains hundreds to thousands of missiles.
Mediators are trying to revive talks, with little progress so far.
The United States has told several Gulf Arab countries to prepare for a possible short, intense military campaign against Iran after the US midterm elections, The Wall Street Journal reported, citing people briefed on the conversations.
The warnings, delivered through diplomatic and military channels, are among a growing number of signs that the US and Israel are preparing for a new round of heavy combat operations aimed at degrading Iran’s capabilities and pushing Tehran toward negotiations, according to the Journal. President Donald Trump has not made a decision, but is leaning toward a large post-election attack that could target Iranian infrastructure and nuclear sites, people familiar with his thinking told the newspaper. Trump has said he will not attack Iran before the November 3 midterms.
Military preparations are under way to give the president options. Officials told the Journal the US is moving a Patriot missile defence system from Texas to the region and has moved troops off bases where they were vulnerable. US forces have been restocking munitions, bomber and fighter aircraft are preparing for strikes, and an additional aircraft carrier strike group and Marine expeditionary unit are poised to join roughly 20 other US warships in the Middle East next month. Israel has also prepared plans and targets for a new attack, the Journal reported, with Prime Minister Benjamin Netanyahu continuing to push for a resumption of strikes.
The White House declined to comment on what it called sensitive military plans that may or may not exist, saying Trump keeps all options on the table to ensure Iran never obtains a nuclear weapon. Trump said at a rally last week that the US could carry out another limited version of the spring bombing campaign, known as Epic Fury, unless Iran agrees to a deal.
A return to airstrikes would mark a shift away from the administration’s economic pressure campaign, in which tighter sanctions and a naval blockade have cut off Iran’s oil sales for months. Several analysts quoted by the Journal questioned whether new strikes would succeed. One argued the US already holds a winning hand through sanctions and the blockade, while a former Israeli military intelligence official said further bombing could harden Tehran’s commitment to its missile and nuclear programmes rather than topple the government.
Iran has warned it would respond to any attack with strikes on economic and civilian targets across the region, as it did earlier in the war when it hit US bases, energy facilities and airports across the Gulf. It retains a stockpile of hundreds to thousands of missiles and is assembling new ballistic missiles from stockpiled parts, the Journal reported, while the US and its Gulf allies are still working to replenish missile defences depleted by earlier Iranian attacks.
Regional mediators are trying to revive talks to head off renewed fighting, but have so far made little progress, with Washington insisting on discussing Iran’s nuclear programme and Tehran setting tough conditions for resuming negotiations. With the midterms less than a week away, the window for diplomacy is narrowing.
This article was written by Eamonn Sheridan at investinglive.com.
