The Situation With Iran and the Strait of Hormuz

[OPSSG]

I am interested, but confused, about your view regarding whether Saudi Arabia is going to stike back. On the 23/9 you said is it very unlikely they won't. On the 26/9 it seems you have changed your mind?

FWIW I agree with your second assessment but not your first.

On 23/9, I believed Saudi Arabia was rounding up collation support for a strike back — their ultimate decisions are multi-factorial but if it was Saudi choice alone, they have the desire to strike Iran. By 26/9, I then belated realised that UAE did not support them and Saudi Arabia under MBS was more cautious than expected. On 23/9, I had not expected that Saudi Arabia would be unable to get their closest GCC member to agree (and get alignment of interests against Iran). I had expected some back room arm twisting to create another coalition of the unwilling. IMO, if UAE says no, it’s an effective veto vote — something that I was not keeping track of — and is the unlikely event I spoke of on 23/9 had indeed occurred.

Who would at an early stage think that UAE cannot get behind the Saudi position and risk a split in interests — a move that emboldens Iran for further strikes on both.

 

[ngatimozart]

I am interested, but confused, about your view regarding whether Saudi Arabia is going to strike back. On the 23/9 you said is it very unlikely they won't. On the 26/9 it seems you have changed your mind?

FWIW I agree with your second assessment but not your first.

I agree with OPSSG's statement that Iran has lost neutrals with its attack on the Saudi refineries. Until then, many neutrals took the view that Iran was the aggrieved party and that it had be restrained in its reaction to US sanctions and other actions. However once it attacked the oil refineries it lost many supporters because they saw, and still see, it as inflaming an already volatile situation.

I also agree that Saudi Arabia will not strike Iran on its own unless it gets a sudden and stupid rush to its collective head. It doesn't have the confidence too, nor the quality of personnel to either plan or carry out such an endeavour. The UAE don't want a bar of it, it's been reported that they've started navy to navy talks with Iran; if Israel wants to do anything about it, the Saudis will get to hear about it on Al Jazeera after the event; if the US does anything, it will be on their terms and the Saudis will be playing second or third fiddle.

 

[Pentaprism]

Who would at an early stage think that UAE cannot get behind the Saudi position and risk a split in interests — a move that emboldens Iran for further strikes on both.

If you are suggesting that you expected the UAE to get involved in a Military Attack on Iran then no, that was never going to happen. Dubai and Abu Dhabi are major Commercial Centres, have significant Tourism Industries and host 2 Major Airport Hubs and their iconic Airlines. As many on this board have noted, low missiles are difficult to detect and intercept and Iran has plenty of them. A couple of successful strikes on the UAE by Iran would create utter Havoc with it's Core Industries. So there is no way the UAE would have even fleetingly considered striking Iran to avenge some relatively minor damage on Saudi infrastructure.

The Saudis don't have Tourism or Significant Airport Hubs but they have much the same problem.They can't deal effectively with what the Houthis throw at them and they surely would not enjoy what Iran sends their way. Palaces are not such Comfortable places to live in when Cruise Missiles are passing through them.

Even the US, which obviously does enjoy overwhelming Power, would not take Iran lightly. They have a lot of Bases and Ships within range of Irani Missiles. Any losses of Ships or Aircraft would be embarrassing and undermine the Air of Invincibility the US enjoys.

So I don't agree Iran has overplayed it's hand Militarily. While there are some Hawks in the US who would gladly strike Iran, Trump does not seem to be one of them and the chances of a retaliatory strike are close to zero and diminishing every day.

Politically of course is a different matter. I do agree Iran has lost neutrals with this attack, mainly the key European Nations. But even these Countries are still aware firstly that the root cause of the issue is the US imposing Sanctions again (for no good reason IMO) and secondly that there aren't too many nice Guys in the Middle East anyway. Maybe Iran doesn't play nice but it's hard to think of many Countries in that region who do. So demonising one nation while supporting others doesn't make a lot of sense. Also I doubt Iran has lost the support of Russia and China.These Countries will be more sympathetic to the pain Sanctions are causing Iran and likely would covertly support Iran if War did break out. Which means the Missiles might keep coming and the Air Defences Perpetually repaired. I don't agree with too much Trump does but not Bombing Iran was a good laydown.

 

[StingrayOZ]

More unbelievable news... also providing insight into Saudi's capabilities..

Looks like 5,000 Saudis have been captured by Rebels..

A Houthi spokesman told the BBC that three Saudi brigades had surrendered near the Saudi town of Najran.

He said thousands of soldiers had been captured and many others killed. Saudi officials have not confirmed the claim.

Yemeni rebels claim mass capture of Saudi troops
Yemen's Houthis say attacked Saudi border frontline, no immediate Saudi confirmation
Yemen: Houthis claim capture of thousands of troops in Saudi raid
Mass surrender: 5000 Saudis captured

IMO I think the Saudi's will struggle arguing the moral high ground on this one. They don't seem to have much capabilities now the UAE is pulled back. Probably a good time to broker a peace deal before things get worse.

 

[peterAustralia]

Wow,

If that is correct that is the end of the war. Will be good to see an end to all this killing. The Saudis will have to pull out and negotiate a truce. In terms of a modern warfare, when was the last time an advanced nation suffered so many prisoners, probably Den Bien Phu,, sixty years ago. These Houthis have proven way more capable than expected, I predict in a year or two there will a major movie about this, how David defeated Goliath, should be a blockbuster, how the poorest nation on earth defeated the richest, has to sell

 

[Feanor]

It's unclear how big this defeat is exactly, but it's big. For example here sources claim 500 dead and 2000 prisoners. Allegedly 3 Saudi brigades were surrounded and destroyed. Many of the captured fighters aren't wearing uniforms which suggests that this isn't entirely a Saudi Army force, but also contains many others. Possibly it's 5000 prisoners all together, only 2000 of them Saudi military personnel?

Разгром саудовской армии в Наджране

EDIT: The announcement from the Houthis on the victory, along with some new footage.

Славная виктория в Наджране

EDIT2: More photos and video of the defeat in Yemen.

Разгром войсками хуситов сил саудовской коалиции в районе саудовско-йеменской границы
Триумф Хуситов

And a video of the strike against Saudi oil facilities.

Интересное кино
Уникальные кадры налета БЛА хуситов на нефтеперерабатывающий завод компании Saudi Aramco

 

[ngatimozart]

This article suggests that the Middle East is more likely to break out into war, unwanted wars, than at any time recently for quite a number of reasons, with some of them not quite obvious. It's well worth the time to read and explores the complexities of relationships between the regional players within the region. It gives good background to the current situation in the Gulf of Hormuz.

The Unwanted Wars

 

[OPSSG]

This article suggests that the Middle East is more likely to break out into war, unwanted wars, than at any time recently for quite a number of reasons, with some of them not quite obvious. It's well worth the time to read and explores the complexities of relationships between the regional players within the region. It gives good background to the current situation in the Gulf of Hormuz.

The Unwanted Wars

Thanks, interesting article that links the local issues to a larger regional context that praises Obama’s incrementalism. Certainly food for thought from a writer with insight that far exceeds my expectations. From my perspective, incrementalism is not without its problems. Currently, the Iranians are dictating the pace of incremental change in a regional conflict that threatens to explode, if these issues are not managed. If deterrence theory fails to restrain Iran, then we are likely to march a path to inevitable war, which is likely draw in external powers.

If the GCC states cannot grow closer after a strike on one of their own members, intra-state politics within GCC states must be really toxic.

 

[John Fedup]

This article suggests that the Middle East is more likely to break out into war, unwanted wars, than at any time recently for quite a number of reasons, with some of them not quite obvious. It's well worth the time to read and explores the complexities of relationships between the regional players within the region. It gives good background to the current situation in the Gulf of Hormuz.

The Unwanted Wars

Interesting read. The ME is probably the best example of how to label something as a cluster f$&@. All the regional players are toxic and the big external players stirring things up (in some cases unintentionally) doesn't help. I really can't see a happy ending to this. The best to be hoped for is no great power clashes over the region and no nuclear exchanges between Israel and Iran.

 

[Feanor]

An Iranian tanker was just allegedly hit by a missile, that Iran claims came from Saudi territory. There appears to be some confusion about whether the tanker is the Sinopa or the Sabiti. It's once again not clear who is behind the attack but to me it feels like someone doesn't want this conflict to die down quietly.

В Красном море атакован иранский танкер

EDIT: More photos of the damaged tanker, it appears to be the Sabiti. It's carrying 1 mln barrels of oil. Apparently nobody was hurt in the attack, and the two strikes came 20 minutes apart.

Две ракеты вызвали сильный взрыв на иранском танкере Sabiti в 60-ти милях от Джедды (Jeddah)

EDIT2: The tanker that was hit may have been involved in transporting oil to Syria.

Атака на иранский танкер в Красном море

 

[ngatimozart]

An Iranian tanker was just allegedly hit by a missile, that Iran claims came from Saudi territory. There appears to be some confusion about whether the tanker is the Sinopa or the Sabiti. It's once again not clear who is behind the attack but to me it feels like someone doesn't want this conflict to die down quietly.

В Красном море атакован иранский танкер

EDIT: More photos of the damaged tanker, it appears to be the Sabiti. It's carrying 1 mln barrels of oil. Apparently nobody was hurt in the attack, and the two strikes came 20 minutes apart.

Две ракеты вызвали сильный взрыв на иранском танкере Sabiti в 60-ти милях от Джедды (Jeddah)

EDIT2: The tanker that was hit may have been involved in transporting oil to Syria.

Атака на иранский танкер в Красном море

The National Iranian Oil Company public relations head, said that the missiles "were 'possibly' fired from Saudi soil". I wonder who the culprits are and I could hazard some guesses.

 

[Feanor]

Some photos of the damage to the Iranian tanker. It continues to leak oil.

Аккуратные повреждения иранского танкера Sabiti в результате "попадания двух ракет"

And the US is deploying 3000 additional troops to Saudi Arabia in the wake of the attacks on their oil facilities.

США дополнительно перебрасывают 3 тыс. военнослужащих в Саудовскую Аравию из-за атак на НПЗ

 

[ngatimozart]

I came across this the other day: Guards Fear Internal Turmoil as Much as US Attack. The article is claimed to be written by citizen journos inside Iran, who want to keep their identities hidden. For some strange reason the Iranian authorities, especially the IRGC, get a tad upset with their citizens writing or saying unkind things about their benevolent rule. The Guard has been extra twitchy because of recent protests that have occurred due to petrol rationing and price rises.

I cannot speak to the authenticity of the IranWire article and / or IranWire, however if it is anywhere near legit, it does give an insight into life within Iranian society.

 

[Ranger25]

I think there’s no doubt there’s a high level of civil unready in Iran. It’s very young population wants more freedoms, access the information, internet etc. add the severe consumer goods shortages and its a recipe for increased civil unrest

 

[Ananda]

When financial markets still dominated by New York or London (which is very interconnected with US Financial system)..then you still has to deal with USD.
No matter Europe try to make Euro as alternative to USD, problem is Paris still not in same leaugue as New York or even London on international Financial trade.

International trade, depends on International Financial capital circulation on keeping it going. When that circulation still mostly dominated by USD, then it's hard for exporter or importer using other currencies only without in stage has to used USD as common exchange currency.

Put my old post on this thread considering how International trade need to do in order to by pass USD usage when dealing with Iran.

Six more countries join Trump-busting Iran barter group | Iran's nuclear programme | The Guardian

Well this is come Guardian, not the most reliable source on International trade info. However what I want to add in here is the additional countries that willing to go with this French initiatives are mostly European. This method will burden Iran on higher fee, then usual International payment method, which is should be understandable considering it's lower transaction volume thus more risky which demand higher margin to be paid by Iran.

Regardless business justification, this in my opinion shown reduce US influence with Euro Partners, on the matter of Iran.

 

[ngatimozart]

Put my old post on this thread considering how International trade need to do in order to by pass USD usage when dealing with Iran.

Six more countries join Trump-busting Iran barter group | Iran's nuclear programme | The Guardian

Well this is come Guardian, not the most reliable source on International trade info. However what I want to add in here is the additional countries that willing to go with this French initiatives are mostly European. This method will burden Iran on higher fee, then usual International payment method, which is should be understandable considering it's lower transaction volume thus more risky which demand higher margin to be paid by Iran.

Regardless business justification, this in my opinion shown reduce US influence with Euro Partners, on the matter of Iran.

@Ananda what would the ramifications be for them to use a currency other than the USD? Such as the Euro? Would it be possible?

 

[Ananda]

what would the ramifications be for them to use a currency other than the USD? Such as the Euro? Would it be possible?

Any one who wants to trade with Iran using other currencies other than USD actually can do it, whether Euro, Yuan or Rubels. The problem is not the currency however the Financial exchange market to do it. That's why French set up this INSTEX.
They want to find a way to trade without using existing money market mechanism, since using existing mechanism will potentially using channels that under USD influences (as I already put on my previous post on early page of this thread).

Let's put this way, say French or German, or other Euro nation wants to trade with Iran. They need Iran oil or Gas, Iran need Euro goods, so why not using Euro as payment transaction ? It's not under US Financial authority anyway.
However if they are using existing money market mechanism, then it's mechanism that also used USD as exchange market medium (as they are circulating on similar Financial systems, thus potentially has to circulated through US Market or US influence market). So if you want to trade, without touching system that also trading USD or influence by USD, then you have to set up separate exchange mechanism outside that regular system.
That's what happen since Breton Woods in the 70's, USD become the exchange currency that other currencies based upon on trading with each other. Thus to avoid USD influence, seting up separate exchange mechanism is the only way. It's going to be more expensive but for Iran what other choices they have. It will cost them more, because it's going to be restricted market with much less volume.
The European will take higher margin I believe, to compensate their effort in setting up this mechanism.

 

[John Fedup]

Probably in 10-20 years, Europe and Asia will take a hard look on whether the US dollar should continue to be the world's reserve currency. The massive debt is a concern but dependence on the US defence umbrella has dampened pressure on any change on the US dollar's status. Another Trump term will see the defence umbrella folding reducing the key reason for letting the US dollar keeping its current status. The question is would the Yuan or Euro be workable. I can see problems with both. Between pollies and cybercrime, perhaps we will all be back to barter transactions.

 

[ngatimozart]

Any one who wants to trade with Iran using other currencies other than USD actually can do it, whether Euro, Yuan or Rubels. The problem is not the currency however the Financial exchange market to do it. That's why French set up this INSTEX.
They want to find a way to trade without using existing money market mechanism, since using existing mechanism will potentially using channels that under USD influences (as I already put on my previous post on early page of this thread).

Let's put this way, say French or German, or other Euro nation wants to trade with Iran. They need Iran oil or Gas, Iran need Euro goods, so why not using Euro as payment transaction ? It's not under US Financial authority anyway.
However if they are using existing money market mechanism, then it's mechanism that also used USD as exchange market medium (as they are circulating on similar Financial systems, thus potentially has to circulated through US Market or US influence market). So if you want to trade, without touching system that also trading USD or influence by USD, then you have to set up separate exchange mechanism outside that regular system.
That's what happen since Breton Woods in the 70's, USD become the exchange currency that other currencies based upon on trading with each other. Thus to avoid USD influence, seting up separate exchange mechanism is the only way. It's going to be more expensive but for Iran what other choices they have. It will cost them more, because it's going to be restricted market with much less volume.
The European will take higher margin I believe, to compensate their effort in setting up this mechanism.

Thanks Ananda. Such arcane mysteries are well outside my limited understandings.

 

[Ananda]

Thanks Ananda. Such arcane mysteries are well outside my limited understandings.

No worries Ngati..I've been working with financial Industry more than two decades. Even then I still couldn't understand all the mechanism. It's a mechanism that 'supposedly' should be simple but in reality getting much more complex to make the '1%' of the world getting richer, while the rest of us as the world 'middle class' has to work hard just to meet ends need.
However it's still the acceptance compared to other alternative on trading.

Between pollies and cybercrime, perhaps we will all be back to barter transactions.

John, I will try to give simple ilustration on why direct barters between two trading nation will be more expensive compared to using current international market trade mechanism.
Let's put Indonesia and Australia, as direct neighbor they should can trade with each other without the need of Global market right ? Well in the reality they can't..they need to arbitrage their exchange rate to International Money Market mechanism.
1 AUD is IDR 9,600..where that valuation coming from..well simply said because 1 USD is 1.47 AUD, thus make 1 USD is IDR 14,100 (give at take several basis point adjustments).
In short, every other currencies arbitrage their valuation to each other based on their each valuation to USD.
In theory the global money market valued by a bucket of dominance currency like USD, Euro, GBP, Yuan, and Yen..as the currency of leading trading nation's. However USD is the only currency that trading nation's used as arbitrage on trading with each other even when they don't have to trade with US or US system. Yuan used mostly on trading with China, Euro used mostly on trading with EU, but USD can be used when trading with everyone not just the US.

If we back to case of Iran, that INSTEX system that French initiate basically can be say as close to barter system in modern world. Because of US sanction, Iranian currency can't be traded to USD or USD influence mechanism. However if the Iranian Rial can't be traded on global money market, then how the Euro's will accept the exchange rate ?..how to determine the exchange rate ?

The answer again has to set up separate mechanism, and it's going to cost Iran more cause the volume of trading will be limited. The Euro's will not accept Iran Rial cause it's worthless in Global Market..thus how to value Iran's Oil..what Euro value that Iran can accept ? Well the answer is kind of barter that will discount Iran price, cause limited exchange mechanism that available to Iran at this moment.

Iran oil to China has to used only Chinese trading with Chinese medium, since no other method available. Same thing with EU, they have to go this INSTEX since no other mechanism can be available between Iran and EU to trade.

China try to used Yuan on International trade, however in reality so far only less then 10% of Chinese global trade that using Yuan direct bilateral exchange regime, the rest still valued in USD. If a second trading nation in the world still has to used USD, you can imagine how difficulty of a small trading nation like Iran has to face if they can't used USD on International trade.

USD is the only currency in the world until now that valued not entirely of it's origin country (US) condition, but also how much everyone else still using it as medium of exchange in International Trade. While every other currencies mostly determined by the economic condition of the origin country it self.