An escalating conflict between Israel and Iran drew military inolvement from the US over the weekend, marking a significant ratcheting up of tensions in the region.
On Saturday (June 21), US B-2 bombers flying out of Whiteman Air Base and a US submarine stationed in an undisclosed location launched strikes against three sites in Iran. The targets were Iranian nuclear facilities at Fordo, Natanz and Isfahan that the US alleges were being used to enrich uranium to create a nuclear bomb.
Both Israel and the US have been adamant that Iran should not be allowed to have nuclear weapons.
The attacks mark the first time the US has used its 30,000 pound Massive Ordnance Penetrator in a combat role.
Prior to the strikes, the US had been working for several months to create a new nuclear deal with Iran.
President Donald Trump had given a deadline for the end of May, and had previously stated that if the Iranian regime did not give up its nuclear ambitions in that timeline, there would be “all hell to pay.”
Iran has retaliated against US bases in the Middle East, with US defense officials confirming an attack at the Al Udeid Air Base in Qatar on Monday (June 23). The base is the headquarters for US Central Command in the region.
In 2020, Iran carried out a similar retaliatory attack against a US base in Iraq following the assassination of Qasem Soleimani, who was head of the Quds Force, a special operations unit of the Islamic Revolutionary Guard.
The US received a warning prior to that attack, and no personnel were killed. The parties used the incident to de-escalate tensions in the region. It’s unclear whether this latest strike by Iran was intended to produce the same results.
Iran is currently considering blocking the Strait of Hormuz, a crucial shipping route for traffic in and out of the Persian Gulf. On Monday, the country’s parliament approved a motion to close the strait; however, implementation would require approval from Iran’s national security council, and experts suggest such a move would hurt more than help Iran.
If approved, the closure could send ripples through global oil markets, with some analysts predicting Brent crude could surge to over US$110 per barrel. A prolonged closure could also exert significant inflationary pressures.
Commodities and markets stay calm
Market reactions to the weekend’s attacks have largely been muted.
Brent crude was down 6.5 percent by 3:00 p.m. EDT on Monday, trading at US$70.68. The gold price put on a relatively flat performance, breaching US$3,390 per ounce, but pulling back to the US$3,370 level.
The silver price was also unchanged, gaining just 0.07 percent to US$36.31 per ounce.
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Securities Disclosure: I, Dean Belder, hold no direct investment interest in any company mentioned in this article.
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