All signs point to the Iranian government locking in for a protracted struggle against the US and Israel.
Iran’s foreign minister this week said the war could only end with reparations for their damages. Trump’s lies and backflips are legendary, but surely even he could not agree to such a thing, at least not anytime soon.
Let’s not forget: the new supreme leader is the son of the previous leader, who was just killed by the US-Israeli bombs.
Sympathy for a government for whom marital rape is not a crime and girls can be “married” at 13 is beyond me. But the economics of this madness are a major problem for all of us.
The US-Israel target is Iran. Iran’s target is the oil supply to the entire Western sphere.
Australia, at first glance, is the most distant link in the chain of the Western economies. Recent headlines stoked fear by showing Australia has just 30 days’ oil stockpiled.
Yet days in reserve is not the real issue. Because our fuel comes from East Asian refineries, Australia has no prospect of being cut off from supply by anything short of world war.
The East Asian refineries themselves buy oil from everywhere – US, Brazil, Africa, Southeast Asia – not just the Persian Gulf. In fact, only about 20% of global oil supply these days comes from the Persian Gulf.
On top of that, Iran doesn’t want to cut off everyone. In normal times, half of Gulf oil goes to India and China, and some tankers destined for India or China have already passed through this week. Both countries are already negotiating with Iran – as other countries will be doing sooner or later – offering who knows what to get their ships through.
So the medium-term prospect is oil supply at 80% or an optimistic 90% of pre-war levels. That’s not the actual end of the world, but it would be an economic disaster with ramifications for years to come.
The original Iranian revolution caused a single-digit percentage drop in global oil supply. Fuel prices doubled.
Two facts show the sensitivity of the oil issue. One is Washington’s remarkably easing of sanctions on Russian oil. The other is that Iran’s own oil exports are continuing, with their tankers motoring right back the US Navy.
Plus, there is an underappreciated issue: major fertiliser manufacturers are set up near Gulf gas producers. Together they produce 30% of the world’s fertilisers.
The absolute worst-case scenario of this war is permanent damage to the oil, gas and fertiliser infrastructure in the Gulf and the Gulf states themselves.
This may sound hyperbolic. But on Thursday, Israel greatly escalated the stakes by striking an Iranian gas field. The strikes were condemned by the US President as well as Qatar.
Hydrocarbon production and desalination have been off-limits in this war – thus far. Iran has historically aimed to respond to attacks upon itself in kind. If it makes extended, successful strikes on Gulf oil and desalination facilities, the damage would be enormous.
For the long term, this unfolding disaster points to the geopolitical significance of the renewable transition. The sooner Australia electrifies and becomes an energy exporter, the stronger our survival in future conflicts will be.
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