Any spikes in oil price during bouts of escalation in tensions between the US and Iran should be viewed as temporary. The deployment of additional forces and the reported sabotage of commercial vessels off the coast of the UAE prompt us to lay out the reasons for this central case (and consider the counter case).
Since the start of the Trump administration US-Iran relations have deteriorated: closer relations with Saudi, reneging on the Iran nuclear deal, removing oil sanction waivers, designation of Iran’s Islamic Revolutionary Guards as a terrorist organisation, and deployment of additional air-strike-capable US forces to respond to potential Iranian threats.
But the path to a full-blown war is not inevitable, contrary to rhetoric from parts of the Trump administration and portrayal as such in sections of the mainstream media. For both sides, the conduct of a full-blown war is too difficult, uncertain and damaging...
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