Iran Expected to Retaliate Against Israel by Tomorrow

In its latest Maritime Security Threat Advisory (MSTA), which was released on August 5, Dryad Global warned that, “Iran is expected to retaliate against Israel within the next 48 hours, assuming no new developments”.

“The last two weeks have seen an unprecedented string of escalating events, with the potential to spark a major regional conflict,” Dryad said in the advisory.

“The growing situation is expected to spark retaliatory attacks on Israeli territory and assets, affecting commercial shipping,” Dryad added.

“Increased Houthi airstrikes on merchant ships in the Red Sea, Gulf of Aden, and Arabian Sea, as well as IRGCN seizures of merchant vessels in the Persian Gulf and Gulf of Oman, are expected,” it continued, noting that severe GPS jamming off the coast of Israel is also anticipated.

A potential war between Iran and Israel could disrupt maritime shipping, increasing costs and delays, particularly on key oil and gas transportation routes, the MSTA stated.

“The warring parties may target vessels and conduct cyberattacks, disrupting navigation systems and communication networks,” the MSTA noted.

“Conflict could also disrupt port operations, limiting their ability to handle cargo and resulting in delays and increased costs. Iran’s retaliation against Israel could have long-term consequences for the global economy, as well as increased Middle Eastern geopolitical instability,” it added.

A war between Iran and Israel would have a significant impact on countries such as Egypt, Jordan, Saudi Arabia, Kuwait, and the UAE, according to the MSTA, which stated that there is the potential of disruption of operations within the Strait of Hormuz along with the Northern Indian Ocean, Red Sea, Gulf of Aden, and the far Eastern Mediterranean Sea.

“In line with this heightened risk, Dryad Global advises against all transit of Israeli-linked vessels within the Red Sea, Gulf of Aden, Gulf of Oman, and the Persian Gulf until further notice,” the MSTA said.

“Perceived affiliation with Israel may include past or partial ownership or management of a vessel, past or expected transit via Israeli ports. Vessels linked with NATO countries are also assessed to be at a heightened risk when transiting these waters until further notice,” it added.

In a recent exclusive interview, Caleb Jasso, an analyst at the Institute for Energy Research (IER), told Rigzone that “widespread regional conflict in the Middle East is certainly more likely than it was a few years ago”. 

“The recent retaliatory Israeli strikes in Beirut and Tehran, and the promise of a response from Iran, have opened the door to the possibility of an expanded regional conflict,” he added. 

“With the Israel-Hamas War now entering its tenth month, continued exchanges between both Israel and Hezbollah, and now Israel and Iran, puts the region on a precarious path toward significant conflict,” he warned.

If widespread regional conflict happens, and directly involves Iran and Israel combating each other, the impact on oil prices could be severe, especially compared to how nominally oil prices have been impacted by the Israel-Hamas War when compared to historical regional conflicts, Jasso told Rigzone.

“One of the more impactful actions on oil prices has been the Houthi attacks in the Red Sea, which began as a result of the Houthis’ support for Hamas and has caused considerable damage to the flow of trade through the Suez Canal,” he said. 

“If a broader conflict ensues, and the Houthis not only continue their attacks but are emboldened further, and Iran decides to harass shipping in the Strait of Hormuz, then oil prices, especially in East Asia, could be negatively affected,” he added.

In another exclusive interview, Benjamin Zycher, a Senior Fellow at the American Enterprise Institute (AEI) outlined to Rigzone that, over the course of this year, a broader conflict in the Middle East is likely, “mainly because the Iranian support for the Houthis will have to be dealt with”. 

“That means a serious attack on the Iranian navy, and a likely reduction in Iranian oil production,” he said.

When asked what a broader conflict in the Middle East would mean for oil prices, Zycher told Rigzone, “a moderate spike and then a return to the longer-run equilibrium”.

In a research note sent to Rigzone on August 1 by the JPM Commodities Research team, J.P. Morgan analysts noted that “the killing of a Hamas leader in Iran ratcheted up tensions in the Middle East”.

In a market analysis sent to Rigzone yesterday, Joseph Dahrieh, Managing Principal at Tickmill, said “worries about a potential U.S. recession outweighed concerns about supply disruptions from rising tensions in the Middle East”.

To contact the author, email andreas.exarheas@rigzone.com