Military Action or Sanctions on Iran Could Backfire for the US and Western Allies

WASHINGTON – Market watchers warn oil prices could surge if the latest dispute between Israel and Iran turns into a wider regional conflict.

If United States (US) President Joe Biden’s administration imposes new sanctions on Iran’s oil exports, this could also lead to higher oil prices, according to observers.

Ahead of Iran’s retaliatory attack on Israel, oil prices soared, but declined slightly after Tehran’s attack. On Monday, Brent fell 0.9%, while West Texas Intermediate (WTI) fell 0.8%.

“The impact of Iran’s attack on oil prices is almost invisible for the simple reason that the flow of oil from the Gulf region is not disrupted,” explained Dr Mamdouh G Salameh, international oil economist and global energy expert to Sputnik.

He explained, “But this could change if Israel retaliates, prompting Iran to retaliate with harsher retaliation that could lead to disruption of oil shipments through the Strait of Hormuz.”

Brent Crude Oil is currently trading around USD90 per barrel, but Salameh estimates we should be prepared for potential increases in the near future.

He estimates Brent will fluctuate between USD90 and USD100 per barrel throughout the year. However, the expert warned that if there is an increase in tensions between Israel and Iran, oil prices could exceed USD 100 and even reach USD 120 per barrel.

“Iran has no choice but to retaliate against Israel’s attack on its Consulate in Damascus, Syria which killed two top commanders of the Islamic Revolutionary Guard Corps (IRGC) or Iran will lose face in the world and be portrayed as a paper tiger,” explained Salameh.

“In addition, Iran warned Israel not to retaliate and that they would face a harsher response if they did. I’m sure Israel will respond in one way or another, but not anytime soon. So we are now in the calm before the storm. “Israel is under great pressure from the United States and its allies not to respond,” the expert continued.