The price of crude oil slightly increased last week, perhaps due to the lingering anxieties over the handling of Syria by fractured opposition, consisting of various rebel groups.
Even a minor incident in the Middle East usually affects the sentiments of both analysts and investors that in turn reflects on oil and gas prices.
Although the take-over was more or less bloodless, the rebel groups hardly see eye-to-eye; since they are divided along religious and ethnic lines, it is hard to imagine a unified front in the coming months, as age-old rivalries may create friction against such a noble mission.
With the dominance of Sunni Muslims and Kurds in the fighting groups, Shite groups supported by Iran have paled into insignificance – a major setback for Iranian ambitions to dominate the region and appear as the sole saviour of the Shite community.
With the loss of a footing in Syria, not only did Iran lose its leeway to torment its nemesis, Israel, through proxies such as Hamas, Hezbollah and PIJ, Palestinian Islamic Jihad, but also failed to use Syria as a launching pad for transferring weapons and training militants.
The recently-appointed Hezbollah leader admitted that the group could no longer receive weapons from Iran through Syria, when it desperately need replenishment, having suffered immensely by Israel air attacks.
It is not just Syria that Iran is losing its influence in; with Hezbollah on its backfoot, the Lebanon government, for instance, exercise its authority against both Iran and Hezbollah assertively as never before.
According to the UN Security Council Resolution 1701, Hezbollah should relocate to the north of the Litani River and hand over its weapons, along with other militant groups, to the Lebanese army; in Hezbollah’s heyday, the Lebanese government was reluctant to confront Hezbollah, let alone disarm the militant group; the government certainly did not have the courage to read riot act against Iran either then – for obvious reasons.
Although it is unlikely that Israel and Hezbollah would go to war again, the uneasy ceasefire, signed by both parties and brokered by France and the US, is hanging by a thread at present. If Hezbollah’s supply routes have been completely cut off, as its leader admitted, the group is not going to make the same mistake by poking a bear again, as it started doing it after October 7, 2023, when Hamas launched an unprecedented attack on the Jewish state.
At present, Israeli fighter jest are relentlessly bombarding what is left of the Syrian military assets, including the aging fighter jets and anti-aircraft defence systems. In short, Israel can take its state-of-the-art modern fighter jets across the Syrian skies as if it owned them without the fear of being shot down.
That means, if Israel decides to take on the Iranian nuclear facilities, as most of the hawks want it, Israel is in a much better and stronger position to do so. In addition, Israel moved away from the buffer zone that the UN used to monitor, way into Syrian territory while holding a crucial mountain with the clear line of sight to the city of Damascus, the Syrian capital.
Israel, meanwhile, enjoys the explicit support of both Druze community and Kurds in Syria; the former even wants to be merged with Israel. The most dominant group of rebels, Sunnis, however, remains neutral at the moment, by saying that they do not want to wage yet another war; they have been tight-lipped about increasing Israel air attacks on the military targets of Syria, though.
Against this backdrop, Benjamin Netanyahu, the Israeli prime minister, who currently is riding on a wave of extreme popularity, addressed the Iranian people again for the third time in a relatively short period of time, raising the hope of them for a permanent change.
Mr Netanyahu’s address, coupled with clearing the Syrian air space have led to a speculation that Israel is prepared to take out Iranian nuclear sites, perhaps with the blessings of the new Trump administration that is going to take reins on January 20, 2025. Fuel was added to speculative fire, when President Trump refused to rule out military action against its old foe, Iran; he simply said, ‘Anything can happen!’.
In Iran, meanwhile, the legislation that made hijab wearing by women compulsory, has not been implemented, perhaps sensing the internal discord. In addition, Iran showed some flexibility with the International body that monitors activities of nuclear plants and uranium enrichment facilities as well.
If President Trump tighten the screw of maximum pressure campaign against Iran by imposing more economic sanctions and stop it from selling oil, especially to China, Iran’s predicament is going to be dire: its currency is already in freefall and as of Friday, last week, one US$ was equivalent to 42,087 Iranian rial! in addition, there are rolling power cuts, despite Iran holding the fourth largest oil reserves in the world and a being a top natural gas provider.
In short, stakes cannot be higher for Iran. In this context, Iran cannot afford to shoot in the foot anymore as the consequences, both on the military and economic fronts, will be dire.
As for the oil and gas prices, if something big happens, the probability of them going through the roof is not very high: on one hand, Iran cannot sell oil as in the international markets as a legitimate player even now; o the other hand, Iran will not escalate a potential conflict to a bigger war as it has to watch many fronts, including the homefront, due to rising cost of living, lack of freedom and falling living standard.
An Iranian academic has already warned that if its nuclear facilities are attacked, it will destroy Qatar, the tiny Gulf country that hosts the largest US base in the region. In the past, Iran did threaten to close the Strait of Hormuz in the Persian Gulf, through which 21% of global oil pass.
With the US attacks groups of the Navy in the vicinity and a formidable firepower by the US and Israel, choosing such an option is easier said than done, as far as Iran is concerned.
Iran has spent $billions over decades to prop up its proxies in the region; Syria alone is said to be owing $30 billion to Iran; all that money and investments have gone up in smoke.
All in all, Iran cannot make any more strategic – or any other – blunder as it is besieged on many sides. If it relaxes its hardened positions to its long term rivals and the West, it may be able to avoid a full-blown conflict on its ground.
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