As the tension between Iran and Israel is on the rise with an imminent retaliation by the latter in the offing, by coincidence a few significant fires broke out in some regions in Iran.
At the weekend, for instance, there was a huge fire in Tehran in an iron-work factory; then, on Tuesday, there was a major fire at an oil refinery in Khuzestan province in Iran that resulted in the death of one worker and injuries in a few more; On Wednesday, meanwhile, Iranian government-controlled media reported of an oil leak from a pipeline, 6 miles off Kharg Island that accounts for 90% of Iran's oil exports.
Kharg Island has been the main focus of analysts in the commodity markets at the moment, as they anticipate an attack by Israel on it, in order to cripple the Iranian economy; Iran, on its part, closed down the facility for operations for a few days and even moved the tankers away from them in anticipation of a missile strike; it, however, did not happen and the operations seem to be back on track, until the news broke out about an oil leak.
Against this backdrop, the falling prices of crude oil continued on Wednesday, despite the dangers that affect the commodity in the volatile region. As of 18:00 GMT on Wednesday, the prices of WTI and Brent were at $70.72 and $74.22 respectively.
The decline in price got a turn for the worse, when the OPEC+ revised down its demand forecast for 2024 and 2024 - yet again: the OPEC+ now says the demand for 2024 and 2025 will be 1.9 million and 1.6 million bpd respectively, by revising down each by 0.1 million bpd.
The IEA, International Energy Agency, did forecast the same thing a few months ago, but the OPEC+ refused to accept the findings; the OPEC+, by contrast, was too optimistic about the demand of fossil fuels during the said period.
in fact, the IEA and the OPEC+ used to be at loggerheads over the issue, up until the latter was compelled to face the reality. As things turned out, the IEA was proven to be correct and the reasons that the organisation spelled out at that time were the real factors such as the static global economic growth, shrinking Chinese manufacturing activity, reflected in its PMI and the high inflation that determined the trend.
The IEA, meanwhile, assured the energy markets by declaring that there is plenty of crude oil in the markets at present and concerns over the dearth of the commodity are misplaced and uttered purely on impulse without formidable rationale.
To make matters worse, there was a significant crude oil build during last week in the US, the world's top consumer of oil. In short, the combination of the crucial factors is hardly a catalyst to shore up the enthusiasm in the markets.
As far as the anticipated retaliation by Israel is concerned, there are speculations that the Jewish state would spare the Iranians oil facilities and nuclear sites in light of the forthcoming US presidential election; if the oil terminals are hit as feared, it will drive up the prices while pushing the inflation even higher; such a scenario could tip the balance of the presidential election as far as Kamala Harris is concerned, as she is under pressure to address it, while explaining to the electorate why she could not do it in power.
The US, meanwhile, has been installing the THAAD - Terminal High Altitude Area Defence system, an anti-missile defence system, in Israel along with 100 soldiers to operate them. The system complements the existing Israel anti-missile defence systems such as the Iron Dome, David's Sling and Arrow System.
Any anti-missile system could be overwhelmed by incoming hundreds of ballistic or cruise missiles, despite being highly efficient. The US has recognized this fact and came forward to supply Israel with an extra layer of protection, if Iran chooses to send more missiles at Israel in the even of a retaliation. Never in the history of warfare, has a country been subjected to a barrage of hundreds of missiles in a short period of time like what Israel experienced in the second attack by Iran.
Military analysts, meanwhile, believe that Israel will retaliate against Iran at any time, as THAAD system has already arrived. The nature of the attack, however, remains to be guessed, as Benjamin Netanyahu, the Israeli prime minister, keeps it as his most important well-guarded secret.
