Iran doubts it can avoid war in the Middle East

Iranian foreign minister Mohammad Javad Zarif refused to rule out military conflict in the Middle East after the US sent more troops and weapons to Saudi Arabia in response to an attack on oilfields that the US has blamed on the Islamic Republic.

“I’m not confident that we can avoid a war,” Zarif said in an interview with CBS in New York. “I’m confident that we will not start one, but I’m confident that whoever starts one will not be the one who finishes it.”

When asked to elaborate, Zarif said: “That means that there won’t be a limited war.”

Zarif was interviewed in New York, where he will attend the UN general assembly session.

The US said on Friday it will send a “moderate” number of troops to the Middle East and missile defence capabilities to the Saudis in response to last weekend’s attack on oil facilities.

Brent crude oil prices increased by nearly 7% last week, the largest weekly gain since January. However, the benchmark price fell in late Friday trade as investors grew more confident of Saudi Arabia’s ability to restore production to pre-attack levels.

An escalation of tensions in the Middle East involving Saudi Arabia, the world’s largest source of crude oil, and Iran, as well as any moves towards armed conflict, will spur prices higher.

“A rise in geopolitical risks could similarly see the international price of oil picking up and emerging-market currencies selling off as risk appetite abates,” said Sanisha Packirisamy, an economist at Momentum Investments, adding that SA imported 42% of its oil from Saudi Arabia in the first quarter of 2019.

Ease tension

“Both a weaker rand-dollar exchange rate and a higher international price of oil could feed through quite quickly into the inflation basket given the relatively quick pass-through into SA transport prices,” Packirisamy said.

Iran’s response has been a mix of defiance and an attempt to ease the tension. President Hassan Rouhani said on Sunday the Islamic Republic will lay out a peace initiative for the region at the UN general assembly that will involve a coalition of regional and foreign countries.

His overture will likely be met with scepticism in Saudi Arabia and the US, where many believe that foreign policy is driven by the hardline Revolutionary Guard instead of the president and his top diplomat.

US and Saudi analyses of the attack have described the strike as complex, involving a mix of low-flying drones and cruise missiles coming from the north.

The attack exposed vulnerabilities in Saudi Arabia’s defence capabilities, despite the kingdom having spent hundreds of billions of dollars on weaponry in recent years.

US officials blame Iran for the attack that knocked out half the production of oil from a key Saudi field. Houthi rebels fighting a Saudi-led coalition in Yemen took credit for the attack.

“I’m confident that Iran did not play a role,” Zarif said. Anyone who “conducts an impartial investigation will reach that conclusion”, he said.

The US will send a “moderate” number of troops to the Middle East and additional missile defence capabilities to Saudi Arabia, top Pentagon officials said. The top Democrat in Congress said the actions are unacceptable.

Secretary of defence Mark Esper said on Friday the decision came at the request of Saudi Arabia and the United Arab Emirates and represent a “first step” in the US response. He reiterated US statements that evidence collected to date shows Iran was responsible for the attacks.

The briefing by Esper and Gen Joseph Dunford, chair of the joint chiefs of staff, followed a meeting of national security officials at the White House.

“Iran is waging a deliberate campaign to destabilise the Middle East,” Esper told reporters at the Pentagon.

He added that the US has shown “great restraint” in responding so far, but called the strike on Saudi Aramco facilities a “dramatic escalation”.

Bloomberg