Energy Prospectus

Not being discussed a lot is Israel.

Israel believes it must prevent Iran from acquiring deliverable nuclear weapons, regarding such prevention as essential to its existence. It is, therefore, from Israel's point of view, not a matter of if, but of when, Israel must act offensively. When is the most opportune time, and what are the optimal circumstances, for Israel to act? That is a complex question the answer to which not even Israel can be sure of.

One thing does seem evident, though. Assuming Iran can be proven to have been involved in the attack on KSA, it has just demonstrated to the world why it should not possess deliverable nuclear weapons. Israel, trying to determine, strategically, when it must act, is likely asking whether this attack presents an opportunity on which it should capitalize.

Israel is likely asking itself whether now is the optimal time and circumstances for action. Iran is only growing stronger militarily with time. Their nuclear program is advancing, as well. But Israel, acting alone, might be unable to succeed using only conventional weapons, and Israel acting alone would be globally condemned. If Israel were to join KSA in a coordinated military effort to do severe damage to Iran's military and nuclear infrastructure, so severe as successfully to bring about regime change, as well as effectively preventing Iran from continuing to cause regional instability, and causing Iran's nuclear program to be substantially impaired, such might serve both Israel's and KSA's interests.

Has, therefore, Iran miscalculated and given Israel and KSA, acting together, an opportunity to act decisively?

The implications of such action would be enormous. Hopefully, Russia, the US, and China, could remain uninvolved. Could they? Would they? Even if it were a "limited" conflict, the short term effects on oil and on the global economy would be profound.

I'm not wishing for (or predicting) anything to happen. But Israel and Iran seem to be on a collision course, and KSA, which also sees Iran as a perennial threat and regional bad actor, may now have an opportunity (with the help of Israel's military) to act "in self defense" aggressively against Iran in an effort to disable the Iranian regime's further bad behavior.

I agree. The tensions in the region went up 10X on Saturday. I just don't see how Saudi Arabia and the U.S. can ignore an attack of this size. IMO it is much worse than if Iran sank oil tankers in the Strait of Hormuz.

Trump: "We are locked and loaded."

Oil prices surged by as much as 19% before coming off peaks. The intraday jump was the biggest since the 1991 Gulf War.

Prices eased after Trump announced that he would release U.S. emergency supplies, and producers around the world said there were enough stocks stored up to make up for the shortfall.

"There is reason to believe that we know the culprit, are locked and loaded depending on verification, but are waiting to hear from the Kingdom as to who they believe was the cause of this attack, and under what terms we would proceed!" Trump said on Twitter on Sunday.

U.S. Energy Secretary Rick Perry pinned the blame squarely on Iran for "an attack on the global economy and the global energy market".

"The United States wholeheartedly condemns Iran's attack on Saudi Arabia and we call on other nations to do the same," he said in a speech to an annual meeting in Vienna of the U.N. nuclear watchdog IAEA. He added that he was confident the oil market "is resilient and will respond positively".

While Iran has denied blame for the attacks, its Yemeni allies have promised more strikes to come. Houthi military spokesman Yahya Sarea said the group carried out Saturday's pre-dawn attack with drones, including some powered by jet engines.

"We assure the Saudi regime that our long arm can reach any place we choose and at the time of our choosing," Sarea tweeted. "We warn companies and foreigners against being near the plants that we struck because they are still in our sights and could be hit at any moment."

U.S. officials say they believe that the attacks came from the opposite direction, possibly from Iran itself rather than Yemen, and may have involved cruise missiles. Wherever the attacks were launched, however, they believe Iran is to blame.

"There's no doubt that Iran is responsible for this. No matter how you slice it, there's no escaping it. There's no other candidate," a U.S. official said on Sunday, speaking on condition of anonymity.

Saudi Arabia and Iran have been enemies for decades and are fighting a number of proxy wars, including in Yemen where Saudi forces have been fighting against the Houthis for four years.

Tension in the oil-producing Gulf region has dramatically escalated this year after Trump imposed severe U.S. sanctions on Iran aimed at halting its oil exports altogether.