Fears of a Wider War

The Council on Foreign Relations discusses Fears of a Wider Mideast War.

Is there danger of this spreading into a region-wide conflict involving Iran?  

Iran is, of course, a patron of Hezbollah [as well as Hamas and other Palestinian militant groups] and there is an ever-present danger of a two-front conflict, which would devastate parts of Israel and much of Lebanon, where Hezbollah is based. There is a risk of escalation. Israeli media reported that the Israeli Defense Forces [IDF] fired at a number of potential infiltrators along its border with Lebanon as the violence was unfolding in the southern part of the country.

Threat to Israel From Hezbollah and Iran Raises Risk of Wider Conflict

The Wall Street Journal reports Threat to Israel From Hezbollah and Iran Raises Risk of Wider Conflict

As Israel combats the Palestinian Islamist movement Hamas in the Gaza Strip, it faces the strategic question of whether Iran will direct its other protégé, the Lebanese Hezbollah, to open a second front in the north.

Iran and Hezbollah have strongly supported Saturday’s invasion of southern Israel by Hamas, which briefly overran Israeli military bases and several villages and towns, killing at least 900 Israelis and taking many others hostage to Gaza.

“This victorious operation will certainly expedite the collapse of the Zionist regime and promises its imminent annihilation,” said Ali Akbar Velayati, a top adviser to Iran’s Supreme Leader Ayatollah Ali Khamenei.

With its arsenal of precision missiles that could target Israeli air bases and infantry forces hardened by the Syrian war, Hezbollah is a much more powerful enemy than Hamas.

Hezbollah’s entry into the war, however, could unleash direct Israeli strikes not just against Lebanon but also against Iran. Such an escalation could drag the U.S. into a much wider conflict—not something that Tehran is likely to be interested in at this stage.

Two Points of View Regarding Hezbollah

• If Hezbollah had planned a wide-scale attack on Israel, military analysts say, it would have made more sense for it to do so on Saturday, simultaneously with Hamas, while also benefiting from an element of surprise.
• Hezbollah and its Iranian backers might also be calculating that it would be much more advantageous to join the conflict later, as an Israeli ground offensive in Gaza causes inevitable civilian casualties and unleashes a wave of public outrage across the region.

Lebanon has been without a president for a year. So escalation from Lebabon is totally up to Hezbollah.

The Journal notes Hezbollah has assured the Lebanese government that it won’t get involved in another war against Israel unless Israel “harassed”.

The meaning of harassed is unclear. And assurances are only worth what they are worth.

Could This Spill Into a Direct Escalation With Iran?

It could. But right now it seems unlikely.

Lebanon is a much tougher call.

Oil Markets Calm, Gold Up

Image courtesy of Investing.Com

Judging from the oil markets, a major escalation seems unexpected, at the moment.

However, we have not yet seen Israel’s full response to Hamas.

WTIC West Texas Intermediate Weekly Chart

(Click on image to enlarge)

$WTIC weekly chart courtesy of StockCharts.Com

Oil Technical Analysis

Technically speaking, $62 to $64 seems to be a floor. Amusingly, $60 is the price Biden wanted to start refilling the Strategic Petroleum Reserve.

Resistance is around $95 per barrel with the current price around $86.

A bullish cup-and-handle pattern appears to be forming right now depending on whether or not you make allowances to allow for a slanted formation.

Alternate View

Best oil analyst + trader I know.And I know because he is one of my 10 contributors for clients. He helped nail the $95 crude short not to mention refiner shorts: @oilin60

"Buy the excursions on the downside of the INTERVENTION COLLAR, and sell the excursions on the upside of… pic.twitter.com/2nAAw3qao3

— Samantha LaDuc (@SamanthaLaDuc) October 9, 2023

$60 Buyer’s Cartel Cap

This is truly hilarious. https://t.co/lvHXZQdAsv

— Rudy Havenstein, Senior Markets Commentator. (@RudyHavenstein) October 9, 2023

I believe Yellen meant for Russia. It would not be surprising if someone purposely left that out.

Regardless, it's still bullshit.

Buyer's cartels do not work. https://t.co/yhg5CXPK2N

— Mike "Mish" Shedlock (@MishGEA) October 9, 2023

$60 is the ceiling the buyer’s cartel wanted to impose on Russia. A quick check shows my interpretation was correct.

WSJ full quote: “Treasury Secretary Janet Yellen said in an interview that the U.S. would very likely take steps to enforce the $60-a-barrel price limit that the U.S. and its partners imposed on Russian oil sales“

Sanctions Don’t Work Because They Create New Markets

Didn't you declare victory on these sanctions?

Here's the deal: China and India will always buy. And they should. It's in their best interest.

— Mike "Mish" Shedlock (@MishGEA) September 18, 2023

A person who touted a buyer’s cartel sanction success, now complains the buyers cartel leaks like a sieve.

For discussion, please see Lesson of the Day: Sanctions Don’t Work Because They Create New Markets

How Much Money to Ukraine and Israel?

The Wall Street Journal want “more, more, more” as discussed in The WSJ Editorial Board Wants to Fight Them Over There Not Here

This is the Vietnam War, Iraq War, and Afghanistan War mentality all over again.

US meddling has always backfired.

More By This Author:

Treasury Yields Are Rising Steeply, But The Yield Curve Is Getting Flatter
Here Comes The Big Push For More Money For Ukraine And Israel
Stunning Drop In Consumer Credit Due To Student Debt Repayments, What’s Next?