AS Israel has not launched the much anticipated retaliatory attack against its archfoe in the region, Iran, as yet, the crude oil prices did not move up exponentially as both analysts and investors feared. That, however, does not mean the world is out of the woods yet, as far as an unhindered supply of the commodity is concerned; the vital waterway, Strait of Hormuz, lies in the troubled region and it accounts for almost 21% of flow of world's crude oil.
Military analysts anticipated that the attack might come on Thursday night, after President Biden and Benjamin Netanyahu, finally spoke on the phone about the strategy of a potential strike, while the former was reeling from handling the aftermath of Hurricane Milton in Florida.
Although the US does not stop Israel from launching strikes against Iran, as did in April in the similar circumstance, reading between the lines of communiques, it is clear that the staunchest ally of the Jewish state still wants to exercise caution against a devastating strike that could result in unwanted consequences.
The focus on the Kharg island is a case in point: most of Iranian oil is exported from the terminals of the island in question; Iran is allowed to sell a certain amount of oil for food and medicine for its citizens on humanitarian grounds; if the island comes under attack, the ripple effect will lead to an increase in the global oil prices and that of Israel too, which in turn could push the inflation further up.
Meanwhile, with just 24 days to go before the US presidential election in November, 2024, the inflation has already become a hot issue; any disturbance in the supply chain could worsen the situation for the Democratic Party, as it has already come under enormous pressure to rein it in. In this context, the US may be trying to avert a scenario in which Iran's oil facilities being vulnerable for attacks.
The other option for Israelis, if they pursue a decapitating strike, is targeting Iran's nuclear sites; Israel has already the backing of influential people for such a move, by people like President Trump and some influential US senators.
It carries enormous risks, though. If enriched uranium stocks are hit, the nuclear fallout will not be just limited to a small region, as radioactive materials are not known for discrimination, when it comes to spreading out from the origin.
The enemies of the Islamic Republic often depict it as an octopus with tentacles being the proxies such as Hezbollah, the Houthis, Hamas and smaller regional groups in Syria and Iraq. The hardliners in the Jewish establishment want the Israeli military to hit the so-called octopus in the head rather than just dealing with the tentacles.
The military planners in the US, meanwhile, want to strike a balance while retaliating against the attack, launched by Iran using over 180 ballistic missiles, despite the absence of major damage or casualties.
Benjamin Netanyahu, the prime minister, meanwhile has addressed the Iranian public directly twice: once he addressed them over the water shortages suffered by the Iranians due to prolonged drought; two weeks ago, he addressed them again while insisting that he is on their side. In this context, it is inconceivable that Mr Netanyahu would pursue something that puts the Iranians, who already suffer from crippling sanctions and rampant inflation, in a more precarious position that they are already in.
In the Middle East, in general, the unwritten concept of might being right still resonates with many inhabitants; Israel is no different; Mr Netanyahu, time and again, in the past advocated the same as the only form of survival of the Jewish state, surrounded by many perceived enemies. In this context, a powerful military response is still possible and the only question remains the kind of form it is going to take.
Yoav Gallant, the Israeli defence minister, meanwhile, did not mince his words two days ago about the retaliation:"It will be deadly, precise and surprising. They will not understand what is happening," said Mr Gallant to reporters about the impending response.
There are already reports, circulating online on Friday night, about multi-pronged cyber attacks against the all three branches of the Iranian government - judiciary, executive and legislature. Quoting an ex official of the supreme council for cyber security, the reports say that information has been stolen from a long list of sections of the said branches including that related to nuclear programme.
If Israel decides to spare the oil facilities in Kharg island or elsewhere for its own reasons, oil prices will settle down again in light of the prevailing related factors such as the strength of the Chinese economy in particular and global economy in general, in addition to the US crude stocks.
Although both the EIA, US Energy Information Administration, and API, American Petroleum Institute, reported a significant fall in the US crude stocks, oil prices did not rise in proportion. On the contrary, it went down, as the state of the Chinese economy started grabbing headlines once again. For instance, China did not extend the stimulus package any more to revive the stalling economy.
In addition, there were concerns about the impact on the oil facilities and refineries in the Gulf of Mexico by Hurricane Milton. Since it lost its strength from Category 5 to Category 3 while making landfall in Florida, neither refineries nor oil terminals suffered badly.
All in all, unless Israel launches an attack at the weekend, the oil prices will find its natural equilibrium next week in light of demand and global economic indicators rather than war sentiments.
