One of the great cliches of war-craft is that the enemy of my enemy is my friend. This expression comes to mind in considering the plausibility of a claim made in my recent conversation with a weapons dealer. He thinks that this June, Israel will use Saudi Arabia as its base for an attack on Iran’s suspected nuclear site.
This weapons dealer has been traveling to Tel Aviv and Jeddah to meet with military leaders who are loading up on his specific weapon category in anticipation of a war with Iran. According to my source — who is planning another trip to both countries soon to sell more weapons – the military leaders are looking to launch the attack in June.
Why would Saudi Arabia support Israel instead of attacking it? The answer there is that Saudi Arabia is dominated by Sunnis; whereas Iran’s leaders are Shi’ite. My source believes that Saudi Arabia’s rage against the Shi’ites exceeds its dislike of its Jewish neighbors.
Meanwhile, my source claims that along with launching missiles on the nuclear site in Iran, Israel will also occupy southern Lebanon in order to take control of millions of missiles that Iran has stationed there to launch aerial attacks on Israel in the event of an Israeli airstrike on Iran.
Moreover, the U.S. will not be simply an innocent bystander in the event of a Saudi supported Israeli attack on Iran. Rather, my source believes that U.S. troops will be withdrawn from Afghanistan in the wake of the recent killing of two Americans in a NATO facility.
He expects the U.S. to announce victory in the next few months and to make the troops in Afghanistan available to support the Israeli attack on Iran in some way.
Is any of this plausible? The Economist reports that there is a perception that Iran is enriching uranium. It writes that Iran is ”acquiring the technology it needs for a weapon. Deep underground, at Fordow, near the holy city of Qom, it is fitting out a uranium-enrichment plant that many say is invulnerable to aerial attack.”
And certainly the price of oil has spiked since last February despite tepid demand and an increase in supply. Oil’s price is up 20% in the last year — Brent Crude sold for $104 a barrel in February 2011 and was a whopping $125 a barrel, as of February 24, 2012.
Supply and demand do not explain a 20% leap in the price of crude. After all, demand growth has been very slow. For example, in 2011, world oil demand crept up a mere 0.8% and that demand is expected to rise a mere 0.9% in 2012 to 89.9 million barrels a day, according to the International Energy Agency.
Meanwhile, the IEA reports that supply is up and is likely to rise in 2012 as well. For example, in January 2012, global oil production was 90.2 million barrels/day — a million barrels/day higher than the year before. Meanwhile, IEA forecasts a considerable increase in OPEC and non-OPEC supply in 2012.
And even if Iran stops producing, supply should not be affected. How so? Reuters reports that Saudi Arabia plans to “increase its output to cover any shortfall to the world supply from Iranian exports.”
And Reuters reported Saturday that Saudi Arabia had increased exports to “just over 9 million barrels a day last week, compared with an average of about 7.5 million in January.” Meanwhile, Iran currently produces 2.2 million barrels of oil per day — supplying “2.24% of the daily oil consumption in the world,” according to SeekingAlpha.
Nevertheless, an attack on Iran raises the level of political uncertainty quite considerably. For example, if there are countries that are supplying arms to Iran — such as Russia and China – they may feel compelled to take sides against Israel’s backers.
This would probably be good for those betting on a rise in the price of oil and gold. But it would not be so good for the global economy — after all a rise in oil prices would boost gasoline prices and put the brakes on an economic recovery in the U.S.
Certainly, rising gasoline prices tax consumers’ budgets. According to AP, “every one-cent increase in the price of gasoline costs the economy $1.4 billion.” If the price of gasoline rises by, say, $2 a gallon, that would reduce GDP by about $280 billion — representing 2% of GDP.
Politically, such a war has the potential to boost President Obama’s chances for reelection. Even if the U.S. is not directly involved in fighting Iran, such a military action would make Americans focus their attention on whether they would prefer the Republican candidates — none of whom have experience in the military – to a commander-in-chief who gave the order to kill Osama bin Laden, ended the war in Iraq, and led the coalition that took out Gaddafi.