Fra Danske Bank:
The war in Middle East is rapidly spiraling, showcasing how wars are easy to start, almost impossible to control and difficult to end. Even if it is not our main scenario, readers should prepare for a long war, and one where the broader MENA region and perhaps parts of Europe are to some extent affected as well.
We should expect supply bottlenecks and price increases for not just crude oil and natural gas, but also for fertilizers. The longer the problems last, the higher the risk of a more persistent inflation shock. But for Europe particularly, the negative growth impact would also be significant in that case.
Despite the recent rise in short-term market inflation expectations, we do not think major central banks will react by hiking rates. And they should not. This is a classic negative supply shock beyond central banks’ control, and longer inflation expectations remain anchored.
The non-apology: On Saturday, Iran’s President Masoud Pezeshkian apologized the country’s Gulf neighbours and promised they would not be targeted anymore for as long as the Gulf states themselves would not attack Iran. Whenever you hear something like this, a de-escalatory tone, regardless of which side presents it, take it with caution at this point. This is warfare, and propaganda is a key part of it . 1) Pezeshkian, while a member of the provisional council, has never been the most influential decision-maker in Iran. 2) The comment was most likely posturing towards neighbours and the international community ( “we are not the bad guys “) more than anything else. 3) In fact, they broke the promise immediately and this morning Pezeshkian said the “enemy drew naïve conclusions from our remarks “.
So, attacks continue. The US / Israeli air raid has been very intense, reportedly the most intense US operation in recent decades. Iran, in turn, based on media reports has reduced the intensity of launching missiles. We do not know if this is to preserve stockpiles or the first signals that their stockpiles are being depleted. Remember, the side that is first starting to run out of stockpiles (Iran missiles vs. US interceptors), will be forced to change tactics. For Iran, it would mean greater reliance on drones (and they are very good at that). For the US (and allies), running out of interceptors would force them to a) prioritize which targets to protect and which to ignore or b) consider a boots-on-the-ground operation, or c) both.
Regarding “boots-on-the-ground “, Axios reported this morning that the US and Israel are considering sending a “special operation ” group on the ground in Iran, but at a later stage in the conflict when Iran’s military would no longer pose a danger to the troops. Remember, without boots on the ground, it will be close to impossible to destroy Iran’s nuclear and missile programs completely. According to the same article, the US administration is also mulling seizure of Iran’s main oil exports terminal (responsible for 90% of exports), Kharg Island. (Resembles the Venezuela playbook).
In a dangerous escalation, both sides now seem to be targeting water desalination plants. First, Iran claimed the US had attacked a desalination plant on Qeshm island on Saturday. Both the US and Israel denied it, and instead, the Israeli media reported that the UAE was behind it. The UAE officials also deny it. Today, Bahrain said an Iranian drone attack had caused material damage to one of their desalination plants. These attacks mark a very serious escalation. Attacking critical civilian infrastructure could constitute a war crime. In the desert, desalination plants are vital for human life. We can take the example of Jubail plant that supplies Riyadh with more than 90% of its drinking water. As a Bloomberg analyst reported earlier in the week, the city would have to evacuate within a week if the plant was seriously damaged.
Hurtige nyheder er stadig i beta-fasen, og fejl kan derfor forekomme.
