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Iran’s role in Israel’s conflict

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The fighting in Gaza has been going on for two months now, and although there has been a temporary ceasefire, there is still no end in sight to the conflict. 

Moreover, there is the possibility of new countries becoming involved. One of the most likely candidates is Iran or the Tehran-backed Lebanese group Hezbollah.

Although the government in Tehran remains somewhat cautious without directly calling for a war, pro-Iranian groups have increased their attacks on US military installations.

Between October 17 and November 21, US bases in Iraq and Syria were attacked 70 times, mainly by the pro-Iranian Islamic Resistance in Iraq.

So is a conflict between Iran and Israel inevitable?

Not necessarily. A widening conflict could lead to increased instability in the region and disruptions in the supply chain or even oil production, which is not in anyone’s interest.

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This is why Saudi Arabia has offered to invest in the Iranian economy in exchange for Iran restraining its allies to prevent an escalation of the conflict with Israel. 

This would probably mean that Tehran would stop arming the “axis of resistance” against Israel, which includes paramilitary groups in Lebanon, Iraq, Syria and Yemen.

Tehran, in turn, has only expressed its readiness to support the development of military relations with Saudi Arabia. At this point, it is impossible to rule out the worst-case scenario on this issue. What if Iran gets involved in the conflict after all?

In short, it would be bad for everyone. On the one hand, there would be more human casualties and, on the other, a blow to the global economy, which is still recovering from the aftermath of the Covid-19 pandemic.

If Iran decides to do so, it could disrupt the passage of ships and oil tankers through the Persian Gulf and, in the worst case, launch attacks on facilities such as Aramco, as it did in 2019.

Such developments are unlikely to inspire market confidence. While a collapse may not be imminent, shifting to defensive assets such as gold (XAUUSD) and the dollar could accelerate.

According to forecasts by Bloomberg Economics, if oil-market disruptions occur, global growth could decline by 1 percentage point, translating into a 1.7% decline in the 2024 indicator.

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What comes next?

Even if Iran ultimately refrains from direct intervention in Israel’s conflict with Hamas, international pressure on the country will not only continue but also increase in the years ahead.

One of the reasons will be Tehran’s ambition to develop its own nuclear arsenal. Israel, already with a nuclear arsenal (albeit highly secretive), has repeatedly stated that it will take all necessary measures to prevent such a scenario.

In short, geopolitical uncertainties are far from over, as too many potential flashpoints have emerged.

In this regard, investors should remain vigilant and remember to hedge their risks, as well as follow the volume indicator to identify possible trend changes.

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Source: Asia Times

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