High oil prices are going to be an issue over the next few weeks if they continue to stay above $100 a barrel. That is a clear challenge for the United States and also potentially for Israel in terms of keeping a lid on a renewed conflict with Iran prior to the elections in both countries.
It is no secret that the looming elections have tended to change dynamics, estimations, and assessments about whether the conflict could start again.
The high oil prices come during a decline in stock prices on Wall Street. This is amid concerns about AI companies and energy prices. That could tend to be a kind of triple threat affecting the US, and thus also affecting Israel.
There has been a lot of messaging about how the Strait of Hormuz is open and the availability of alternative energy sources, but the question is whether or not the global market will accept these assertions.
Recent videos show ships sinking in the Strait of Hormuz and all sorts of containers floating away as ships are in distress. This is not something that will boost global optimism regarding supply chains, and it always remains a question whether enough ships are transporting energy supplies.
What will the Houthis do?
It also leads to questions about what the Houthis might do. The Houthis could try to threaten the Bab el-Mandeb Strait. They could also encourage other Iranian proxies, such as those in Iraq, to continue attacks on Saudi oil and gas energy infrastructure.
A mysterious explosion in Iraq on Saturday appears to have struck an Iranian proxy group. All this could continue to disrupt global trade.
When there are attacks on pipelines or transit points in Saudi Arabia, for instance, it takes weeks to repair them. That creates disruption, and all those disruptions add up to the feeling in the global market that there is too much uncertainty.
This kind of uncertainty will affect the US. It already appears to be affecting US policy regarding the Ukraine war and Russia, and this is the kind of thing that can lead to escalation in the Middle East or miscalculations in which something happens again with Iran.
Iran continues to be blockaded, but it also tends to feel a bit confident about its next steps. Therefore, we are seeing a potential for escalation within the next week or two.
Iran also knows there are elections in Israel and the US; therefore, Iran and its proxies may want to take advantage of this period.