Israel hails success of Iran strikes but strategic aims still elusive
JERUSALEM — As the sun rose over Tehran on Friday, the startling scale of Israel's surprise attack on Iran became evident: Israeli forces, supported by a covert Mossad operation months in the making, severely damaged the Iranian nuclear facility at Natanz, destroyed some of Iran's ballistic missile arsenal and killed half a dozen senior Iranian military leaders and nuclear scientists in a flurry of 100 airstrikes.
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Bloomberg
29 minutes ago
- Bloomberg
Iran's Araghchi Says US Talks ‘Unjustified' After Israeli Attack
Iranian foreign minister and lead negotiator, Abbas Araghchi, said continuing nuclear talks with the US would be 'unjustifiable' in light of Israel's ongoing military assault on the Islamic Republic, according to a government statement. Araghchi's comments are the strongest sign yet that Iran is likely to withdraw from its negotiations with the Trump administration, which were scheduled for a sixth round on Sunday.
Forbes
30 minutes ago
- Forbes
Higher Oil Prices Mean Less GDP
Iran's supreme leader Ayatollah Ali Khamenei speaks after casting his ballot during the runoff ... More presidential election in Tehran on July 5, 2024. (Photo by ATTA KENARE / AFP) (Photo by ATTA KENARE/AFP via Getty Images) The shale revolution has been a huge boon for America, producing an enormous amount of income, tax revenue and employment as well as reducing CO2 emissions. At the same time, by reducing our net oil imports, they have substantially improved our energy security. But the simple metric of net imports understates the complexity of energy security. Energy vulnerability is often treated as nothing more than reliance on imports from foreign countries, and that is certainly a crucial element but hardly the only one. Conversely, the fact that the U.S. still imports as much as eight million barrels a day of oil overstates our vulnerability: lost imports would not mean a shortage for domestic consumers, as that oil is swapped out for domestic supplies for the sake of economic efficiency, and producers can simply retain crude that is currently exported. The Figure below breaks down the source of gross imports; the decline in oil from OPEC is pronounced, while the rise of Canadian oil imports, due to higher oil sands production, exaggerates the security of our supply, albeit only slightly. U.S. Oil Imports (thousand barrels per day) On the one hand, despite ongoing tension with Canada, they are unlikely to cut off sales to the U.S. for political reasons. Nevertheless, there is no guarantee that in a new disruption of global oil supply, such as from unrest in Russia or war in the Middle East, Canadian oil would continue to be delivered to American refiners. In theory, Canada could use the U.S. for the transshipment of oil to better paying overseas customers, although given the globalized nature of the oil market, prices should not be significantly different elsewhere. Of course, should American politicians (foolishly) respond to a global oil crisis by restricting exports of domestic crude, U.S. oil prices would presumably drop below global prices, encouraging Canadian companies to export their oil elsewhere. Such a populist move by the U.S. would be detrimental and the impact multiplied if politicians tried to prevent Canadian companies from selling their oil onwards, mostly through the Gulf Coast ports. Should, say, a country like China offer attractive deals to Canadian companies for additional supply (similar to what happened in 1979), the political calculus becomes more complex. But this highlights another way the globalized oil market affects energy security: even if the U.S. is well-supplied with oil, a global oil crisis will translate into higher domestic oil prices. Absent political intervention, U.S. prices would rise to match global oil prices, meaning even with our current energy independence, a new oil crisis would inflict economic damage. Certainly, now that the U.S. is a net exporter of oil, higher oil prices would improve not worsen the trade balance. Still, sending the money from East Coast consumers to Southwest producers will have a deflationary impact on the economy because higher oil prices have an effect similar to a tax hike. Consumers would spend more for gasoline and reduce other spending accordingly. It is generally thought that a tax hike lowers GDP by 2-3 times the increased taxes, so that an increase in taxes equal to 1% of GDP yields a 2-3% reduction in GDP. 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Still, in the case of a prolonged period of $100 per barrel oil, which many think could be achieved if the Middle East situation worsens significantly, a GDP loss of 0.5% is quite likely. Change in Real GDP (percent) At present, it appears unlikely that Middle Eastern oil supply will be affected by the ongoing conflict between Iran and Israel. Attacks on shipping or the Straits of Hormuz would boost prices but are unlikely to persist beyond a few weeks. More worrisome would be an Israeli attack on Iranian oil facilities, although at present, such is not expected. So, $100 oil for several months would not automatically translate into a recession, but would have a notable impact on GDP growth, especially if the Fed raises interest rates as higher oil prices increase inflation. But an oil price spike will definitely worsen consumer and business confidence. As much as it would be nice for cash-rich Southwesterners to spend their increased income on Maine lobster and New England clam chowder, a prolonger period of higher oil prices--$100 or more—will be disruptive enough to threaten at least significant economic slowing and potentially tip us into a recession.
Washington Post
37 minutes ago
- Washington Post
Zelenskyy warns oil price surge could help Russia's war effort
KYIV, Ukraine — A sharp rise in global oil prices following Israeli strikes on Iran will benefit Russia and bolster its military capabilities in the war in Ukraine, Ukrainian President Volodymyr Zelenskyy said Friday in comments that were under embargo until Saturday afternoon. Speaking to journalists in Kyiv, Zelenskyy said the surge in oil prices threatens Ukraine's position on the battlefield, especially because Western allies have not enforced effective price caps on Russian oil exports.
