Below are five charts on points you need to know about the Israel-Iran confrontation, the risk of a regional war, and where the U.S. is situated in this
August 12, 2024 - By Clifford Young and Mark Polyak - This week we wanted to take a step back and look at some developments around the world, particularly in the Middle East as the region is on high alert after a series of escalations. Mark Polyak, President of Global Data Management, is guest authoring the piece.
For context, Iran and its proxies, including Hezbollah, vowed “harsh punishment” on Israel after Israel assassinated a Hamas leader in Iran and a senior Hezbollah leader in Lebanon, following a rocket attack that killed twelve children in the Golan Heights.
Iran had already launched an attack on Israel earlier this year, but a more coordinated large scale attack risks launching the region into war. As tensions in the region rise, the global economy, geopolitics, and companies’ risk profiles may shift.
Below are five charts on points you need to know about the Israel-Iran confrontation, the risk of a regional war, and where the U.S. is situated in this.
- Election uncertainty. The U.S. is in the midst of an election year in what looks to be an incredibly close race. Each candidate has very different ideas of America’s place and use of military power on the international stage. Any major escalation in Middle East over the next three months which requires direct US engagement may tip the scales in an already tumultuous and historic election cycle. This is part of the backdrop for the U.S.
- What to know about potential escalations. Right now, it appears that a ceasefire in Gaza is unlikely before the end of October. President Joe Biden’s administration is actively pushing for ceasefire, but both sides appear to be apart on a number of critical issues. At the same time, Lebanon is facing two potential scenarios: a preemptive Israeli strike on Hezbollah or a joint Iranian/Hezbollah attack on Israel resulting in punishing Israeli counterpunch. The intensity of these attacks is up in the air, and range widely. This situation is highly volatile: many foreign embassies have evacuated their staff from the country, air traffic has been curtailed, and the population is stockpiling on food. There is a high possibility of miscalculation which could escalate to a regional war.
- A brief timeline. The roots of this iteration of the conflict began after the October 7 attack on Israel, but tensions extend much further back. Now, the region is teetering on war. What’s next? We will see.
- Importance of the region. Iran is among the top producers of crude oil out of countries in OPEC, making it of particular importance to the U.S. A disruption of oil production in this area could present an opportunity for U.S. oil exports, which have been revving their engines and expanding production and exporting in recent years, with 2023 being highest year on record for US crude oil. Wider war holds important implications for the U.S. and world economy.
- Iran viewed negatively. Taking it back to U.S. public opinion, things aren’t as simple as they seem. On the surface, Iran is viewed as unfavorably as countries like Russia and North Korea. However, many Americans, particularly younger Americans, are wary of the U.S. getting drawn into conflicts around the world. The risks for boycotts for companies is ever present and being felt by key U.S. brands. There are many layers to peel back on opinion around this conflict here.
The Middle East is in a precarious situation. Tempers are flaring and the threat of war is as strong as ever. According to CNN, Iran is mulling potentially scrapping its revenge plans on Israel. The U.S. has also warned Iran that a major attack could pose a “serious risk of consequences” for Iran’s economy. But that doesn’t preclude Iranian proxy actors, such as Hezbollah from engaging into a miscalculated attack resulting in a regional war.
A war in the Middle East, especially if the U.S. gets involved, would almost certainly alter the course of the U.S. election, the global economy, and history. What will happen? We will see.
Source: Ipsos
