U.S. Expects Iranian Military Action 'This Week'

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Written by Daniel Graeber for Industrial Info Resources (Sugar Land, Texas)--Alarms over the potential for an escalation in the conflict in the Middle East are growing louder as an attack by Iran seems imminent, but the commodity markets remain so far subdued.

The U.S. Defense Department announced during the weekend that it was deploying more maritime assets to the Middle East, nearly 10 months to the day after militants from Hamas stormed the Israeli border from the Gaza Strip.

Hamas, as well as the Lebanese group Hezbollah, enjoy backing from Iran and the conflict has turned into something of a proxy war between backers of Iran and backers of Israel. The situation escalated last month when Israel assassinated the political leader of Hamas on Iranian soil.

Dryad Global, a maritime risk consultant, said last week that it expected an imminent response from Iran. During a press briefing Monday, U.S. Defense Department spokesman John Kirby said the threat was indeed real.

"With respect to potential timing here, it could be this week," he said, adding any attack from Iran could be a significant one.

So far, the commodity market has been subdued in the face of renewed threats. The price for Brent crude oil, the global benchmark, was trading in the low $80 range in pre-market trading on Wednesday. It spiked to around $85 per barrel last month but has since declined on the back of U.S. and Chinese economic concerns.

Iran in April launched a barrage of missiles at Israel in response to an Israeli strike on its consulate in Syria, though the attack was broadcast well in advance and caused minimal damage. Brent traded in the $90 range shortly after the Iranian assault.

Meanwhile, attacks on maritime shipping lanes in and around the Red Sea continue, with the Iranian-backed Houthi rebel group firing on vessels off the Yemeni coast.

The United Kingdom Maritime Trade Operations (UKMTO) reported Tuesday that a vessel had come under attack from drones fired from Yemen, though the ship was secure enough to proceed to its next port stop.

About 30% of global container shipping would usually travel through the Red Sea and surrounding waterways, though that had dropped by half as of March as attacks escalated, the World Bank said.

Greek-owned M/V Tutor sank in June after it was hit twice by Houthi fire off Yemen.

Shippers such as Maersk have long since rerouted around the Cape of Good Hope off South Africa, though economists at the Organization of the Petroleum Exporting Countries warned in their monthly market report for August that a geopolitical risk premium could return to commodities.

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