Ignaalbe

Summary: I have decided to keep my previous numbers unchanged. Recent ceasefire talks currently underway in Paris are a promising sign, but the prevalence of airstrikes sends mixed signals. After conferring with Moritz I decided to raise my YES estimation by 6%. I think that our reasoning was very similar and he was very insightful in assisting me to better think about my numbers. The analysis remains the same, but this was a good opportunity to think a little further about how to use the number allocations for these binary questions. Everything else remains the same.  

The recent ceasefire talks that are underway in Paris are a promising sign for this assessment. I still however worry that the continued bombing campaign and the recent news that the death toll has surpassed 29,000 are worrying sign. There is widespread hope that the talks may succeed but I remain cautious.

My main concern in this assessment is that PM Netanyahu may believe that this is not the moment for a deal. U.S. frustration with Israel also signals that they foresee a continuation of the conflict.

Overall I am generally cautious. There is a lot of noise and chatter but I think that evidence for what the result will be is lacking. This may seem like a short answer but I remain generally unmoved by recent developments. There still is a lot of international pressure underway and the U.S. has made it clear that time is running out for Netanyahu. The rapid approach of Ramadan is promising for me. 

For some reasons the links are not here but they can be found in the previous answers.

Summary: I have decided to reduce my prediction by 13% from 33% down to 20%. My baseline that the most likely "culprit" of a potential attack on Iran is still that it could be Israel. Growing U.S. irritation with Israel and signals that the administration is pressuring for de-escalation are the main drivers of this downgrade. Recent clashes related to Pakistan have no impact on this assessment. After conferring with Moritz I have decided to maintain these numbers and my assessment. We agreed on our assessments even though we looked at different evidence, which was interesting. 

I had originally presented the question of what an “attack on an Iranian nuclear- or missile-related facility” entails. To do so established who the potential “culprits” of such an attack could be. Based on a historical review of recent events, particularly through the Crisis Group’s platform (Crisis Group: https://www.crisisgroup.org/crisiswatch) I argued that the baseline is constituted by four potential sources of attack: Israel, the United States, Saudi Arabia, and Pakistan.

Pakistan: While Iran and Pakistan exchanged drone and missile attacks three weeks ago, no further escalations have taken place since other than a recent raid against insurgents. Pakistan also just greenlight a pipeline project connecting both countries. For this reason, the chances of a Pakistani strike remain low.

Saudi Arabia: A niche but useful indicator that both countries are pursuing a détente was the recent participation of Iranian military officials in a high-profile meeting in Riyadh. Saudi Arabia remains detached from conflict with Iranian proxies in Yemen. I remain confident in this assessment of Saudi Arabia's potential threat.

United States: The Biden administration has shown every indication that it is interested in preserving regional stability in the Middle East. Recent US strikes against Iranian-linked militias remained contained and have not resulted, at least yet, in an expansion of the conflict. The U.S. is now considering sanctions against Iran for providing weapons to Russia, but my assessment is that U.S. strikes on Iran run contrary to the administration's objectives in both Ukraine and Gaza.

Israel: Finally, in this assessment the clearest threat remains that of a potential of a unilateral Israeli strike on Iran. Recent news that Israel is accelerating the purchase of F-35 fighter jets from the U.S. is a potential signal that Israel is raising its strike capabilities. However, the main point here is that there have been clear signals that the U.S. wants an immediate de-escalation, and that it has signaled Israel that it does not support an offensive in Rafah. The U.S. is clearly not interested in wider escalation, and Israel will probably not have U.S. support if it decides to strike Iran overtly. Israel would then face the possibility of a massive missile strike from Hezbollah, a threat that limits Israel's maneuverability of it acts without U.S. backing. 

For some reasons the links are not here but they can be found in the previous answers.

Summary: My previous assessment remains largely unchanged. Consistently low prices and recent downward trends in futures markets indicate that prices will remain operating under previous dynamics. Only marginal changes from my previous estimate in favor of the lower price option. After conferring with Moritz I have decided to maintain my analysis as it stands. We had both reached similar conclusions by looking at different data sources and that was very reassuring. 

I remain confident that low prices will remain the norm for the foreseeable future. Remembering my baseline, earlier market analysis by City had placed oil price expectations for this year at $74, and prices have remained under that framework. As I mentioned earlier, previous U.S. government estimates for global production estimated an expansion of global production throughout 2024, which adds strength to this assessment. Oil futures, a key indicator for what the market is seeing, still operate in the mid $70s, far below the peak of almost $94 it reached in late September. The trendline for the past three months remains within a band that moves between 70 and 79 USD.

Crude prices also operate under the same prices. As mentioned earlier, OPEC+ production remains higher than expected, and Iranian oil exports are also at an all-time high. China also faces serious domestic economic challenges that have tempered growth estimates, reducing pressure on oil prices.

As mentioned earlier, the fact that we are approaching the end of this question’s timeframe (end of March) also makes it likely that prices will remain below $90.

For some reasons the links are not here but they can be found in the previous answers.

Summary: I have decided to keep my previous numbers unchanged. Recent ceasefire talks currently underway in Paris are a promising sign, but the prevalence of airstrikes sends mixed signals.

The recent ceasefire talks that are underway in Paris are a promising sign for this assessment. I still however worry that the continued bombing campaign and the recent news that the death toll has surpassed 29,000 are worrying sign. There is widespread hope that the talks may succeed but I remain cautious. 

My main concern in this assessment is that PM Netanyahu may believe that this is not the moment for a deal. U.S. frustration with Israel also signals that they foresee a continuation of the conflict.

Overall I am generally cautious. There is a lot of noise and chatter but I think that evidence for what the result will be is lacking. This may seem like a short answer but I remain generally unmoved by recent developments. There still is a lot of international pressure underway and the U.S. has made it clear that time is running out for Netanyahu. The rapid approach of Ramadan is promising for me. 

Summary: My previous assessment remains  largely unchanged. Consistently low prices and recent downward trends in futures markets indicate that prices will remain operating under previous dynamics. Only marginal changes from my previous estimate in favor of the lower price option. 

I remain confident that low prices will remain the norm for the foreseeable future. Remembering my baseline, earlier market analysis by City had placed oil price expectations for this year at $74, and prices have remained under that framework.  As I mentioned earlier, previous U.S. government estimates for global production estimated an expansion of global production throughout 2024, which adds strength to this assessment.  Oil futures, a key indicator for what the market is seeing, still operate in the mid $70s, far below the peak of almost $94 it reached in late September. The trendline for the past three months remains within a band that moves between 70 and 79 USD.

Crude prices also operate under the same prices. As mentioned earlier, OPEC+ production remains higher than expected, and Iranian oil exports are also at an all-time high. China also faces serious domestic economic challenges that have tempered growth estimates, reducing pressure on oil prices.

As mentioned earlier, the fact that we are approaching the end of this question’s timeframe (end of March) also makes it likely that prices will remain below $90.

Summary: I have decided to reduce my prediction by 13% from 33% down to 20%. My baseline that the most likely "culprit" of a potential attack on Iran is still that it could be Israel. Growing U.S. irritation with Israel and signals that the administration is pressuring for de-escalation are the main drivers of this downgrade. Recent clashes related to Pakistan have no impact on this assessment. 

I had originally presented the question of what an “attack on an Iranian nuclear- or missile-related facility” entails. To do so established who the potential “culprits” of such an attack could be. Based on a historical review of recent events, particularly through the Crisis Group’s platform (Crisis Group: https://www.crisisgroup.org/crisiswatch) I argued that the baseline is constituted by four potential sources of attack: Israel, the United States, Saudi Arabia, and Pakistan.

Pakistan: While Iran and Pakistan exchanged drone and missile attacks three weeks ago, no further escalations have taken place since other than a recent raid against insurgents. Pakistan also just greenlight a pipeline project connecting both countries. For this reason, the chances of a Pakistani strike remain low.

Saudi Arabia: A niche but useful indicator that both countries are pursuing a détente was the recent participation of Iranian military officials in a high-profile meeting in Riyadh. Saudi Arabia remains detached from conflict with Iranian proxies in Yemen. I remain confident in this assessment of Saudi Arabia's potential threat.

United States: The Biden administration has shown every indication that it is interested in preserving regional stability in the Middle East. Recent US strikes against Iranian-linked militias remained contained and have not resulted, at least yet, in an expansion of the conflict. The U.S. is now considering sanctions against Iran for providing weapons to Russia, but my assessment is that U.S. strikes on Iran run contrary to the administration's objectives in both Ukraine and Gaza.

Israel: Finally, in this assessment the clearest threat remains that of a potential of a unilateral Israeli strike on Iran. Recent news that Israel is accelerating the purchase of F-35 fighter jets from the U.S. is a potential signal that Israel is raising its strike capabilities. However, the main point here is that there have been clear signals that the U.S. wants an immediate de-escalation, and that it has signaled Israel that it does not support an offensive in Rafah. The U.S. is clearly not interested in wider escalation, and Israel will probably not have U.S. support if it decides to strike Iran overtly. Israel would then face the possibility of a massive missile strike from Hezbollah, a threat that limits Israel's maneuverability of it acts without U.S. backing. 

After comparing notes with Mauricio, I have slightly updated my assessment. Below I run an updated version of my assessment with comments in bold.

My assessment has changed toward a higher chance of low prices despite recent market fluctuations. Thinking about or baseline, earlier market analysis by City (https://www.reuters.com/markets/commodities/citi-lowers-2024-brent-price-forecast-74-per-barrel-2024-01-12/) had placed oil price expectations for this year at $74, and prices seem to continue operating under that framework (see below). US government estimates for global production only see an expansion of global production through 2024, which adds strength to this assessment (https://www.eia.gov/todayinenergy/detail.php?id=61222#:~:text=We%20expect%20the%20Brent%20crude,generally%20follow%20the%20same%20path.) An important variable here are oil futures: they still operate in the mid $70s, far below the peak of almost $94 it reached in late September (https://www.google.com/finance/quote/CLW00:NYMEX?sa=X&ved=2ahUKEwiE1_HvsaSEAxXOEVkFHSe6AOoQ3ecFegQIEhAX&window=6M). The trendline for the past three months remains within a band that moves between 70 and 79 USD. Current crude prices operate under the same prices despite marginal gains in recent days (https://oilprice.com/oil-price-charts/#WTI-Crude). Another piece of good news for low prices was that OPEC+ countries failed to meet its output cuts in January to raise prices (https://www.spglobal.com/commodityinsights/en/market-insights/latest-news/oil/020824-opec-output-sees-biggest-drop-in-six-months-but-short-of-pledged-cuts-platts-survey) showing that the block remains relatively uncoordinated in its ability to drive prices up. This is also connected to the war in Ukraine, where recent attacks on a Russian refinery in the Black Sea actually led to an expansion of crude by Russia as it sought to compensate for the loss in other areas (https://www.reuters.com/business/energy/russias-refinery-damage-casts-doubt-opec-supply-cut-commitments-2024-02-08/), undercutting the OPEC+ agreement. Iranian oil exports are also at an all-time high, mainly headed to China, which creates an incentive for Iran to avert a major conflict in the Persian Gulf which could hurt its economic recovery; China has a similar interest in preserving stability in this subregion and preserving low crude prices as it deals with its own market and financial challenges at home (https://asia.nikkei.com/Business/Markets/Commodities/Iran-s-oil-exports-reach-5-year-high-with-China-as-top-buyer). The fact that we are also approaching the end of this question’s timeframe (end of March) also makes it likely that prices will remain below $90.

My logic remains the same, and my assessment has remained mostly unchanged, but after speaking with Mauricio I have recognized that we had different understandings of how to work with the numbers in this question. I have now updated it to provide every potential scenario with at least a small possibility, given that nothing is impossible, and I have fixed my numbers to more accurately reflect the logic I explained above.

After comparing notes with Mauricio, I have updated my assessment up to a 60% chance of this transpiring. Below I run an updated version of my assessment with comments in bold.

The baseline for this analysis is that the current Israeli government, which is heavily embattled domestically over its handling of the hostage crisis and earlier domestic divisions over judicial reform, sees total victory in Gaza as concrete security objective it must reach. In fact, PM Netanyahu has been very outspoken in his support of the looming invasion of Rafah, the last major urban center in Gaza not under Israeli occupation (https://abcnews.go.com/International/netanyahu-this-week-interview/story?id=107130717). The full occupation of Gaza and the elimination of that territory as a base of operations for Hamas remains, according to the government, Israel’s top objective.

Here I recognize that I had focused too much of my assessment on Israel's commitment to victory that I failed to acknowledge that a ceasefire is not incompatible with Israel achieving its security objectives. The timeframe for this question is so broad, the international pressure keeps mounting, and Israel could either successfully negotiate a ceasefire now before the Rafah offensive or after, with Hamas defeated, and this question would still produce a positive result. 

There are talks underway about either a potential ceasefire or truce (https://www.bbc.com/news/world-middle-east-68225663) but the Israeli government has made it clear that it cannot accept Hamas’ offer (https://www.npr.org/2024/02/07/1229823811/israel-hamas-war-netanyahu-rejects-hamas-ceasefire#:~:text=via%20Getty%20Images-,Israeli%20Prime%20Minister%20Benjamin%20Netanyahu%20has%20rejected%20a%20cease%2Dfire,end%20of%20the%20phased%20truce.). I agree that many sources are indicating that talks toward a truce are moving forward but given my baseline assumptions I don’t se this as enough evidence that a truce is imminent.

In fact, we should challenge the question: what does a truce entail? The timeframe for this question is too broad, and it could mean an immediate ceasefire now, before the invasion of Rafah, or it could be a ceasefire following a full Israeli victory and occupation. I am moving more toward thinking that a truce is possible, but I remain hesitant. The Netanyahu administration is very close to fulfilling a key security objective, and despite international pressure I still think the PM is convinced that total victory is necessary.

As you can see with this previous paragraph, I focused too much on the fact that Israel is pushing for victory without acknowledging that these are not mutually exclusive. 

After comparing notes with Mauricio, I have updated my assessment up to a 1/3 chance of this transpiring. Below I run an updated version of my assessment with comments in bold.

First, we need to think about what an “attack on an Iranian nuclear- or missile-related facility” entails. To do so we must establish who the potential “culprits” of such an attack could be. Based on a historical review of recent events, particularly through the Crisis Group’s platform (Crisis Group: https://www.crisisgroup.org/crisiswatch) I argue that the baseline is constituted by four potential sources of attack: Israel, the United States, Saudi Arabia, and Pakistan. Let us quickly go through each of these potential aggressors.

Pakistan: While Iran and Pakistan exchanged drone and missile attacks two weeks ago, no further escalations have taken place since. The attacks were targeted at “terrorist hideouts” in each country, and while this constituted an unexpected flareup of tensions it has not escalated into further strikes on military infrastructure (BBC: https://www.bbc.com/news/world-middle-east-68017051). Pakistan only retaliated after Iranian aggression, and the fact that no further military clashes took place is a sign that both countries face more important challenges elsewhere, namely Pakistan and its rapidly collapsing economic outlook (Al Jazeera: https://www.aljazeera.com/economy/2024/2/6/in-pakistan-old-hopefuls-jostle-to-turn-around-struggling-economy) and Iran’s own challenges in the broader Israel-Hamas conflict. For this reason, the chances of a Pakistani strike remain low.

I remain confident in this assessment of Pakistan's potential threat.

Saudi Arabia: A niche but useful indicator that both countries are pursuing a détente was the recent participation of Iranian military officials in a high-profile meeting in Riyadh (Bloomberg: https://www.bloomberg.com/news/articles/2024-02-06/iran-at-saudi-defense-show-signals-warmer-ties-in-time-of-war). Saudi Arabia is also currently embarked in a wider effort to diversify its economy and attract FDI and high-income migrants into projects like NEOM which is why a Saudi strike seems unlikely. Saudi Arabia has also detached itself from conflict with Iranian proxies in Yemen after years of conflict.

I remain confident in this assessment of Saudi Arabia's potential threat.

United States: The Biden administration has shown every indication that it is interested in preserving regional stability in the Middle East. Recent US strikes against Iranian-linked militias remained contained and have not resulted, at least yet, in an expansion of the conflict. A positive sign was the recent news that the US and Iran have been engaged in secret dialogue for months (Reuters: https://www.reuters.com/world/iran-foreign-minister-says-iran-us-have-exchanged-messages-recent-weeks-2024-02-10/) which is a positive sign that de-escalation mechanisms may be in place.

I remain mostly confident in this assessment of the United States' potential threat to Iran's infrastructure, but I have updated my assessment by recognizing the possibility that if the US detects a sudden change in Iran's nuclear program it may feel obliged to undermine the program in some way, including through covert and cybernetic means.

Israel: Finally, in this assessment the clearest threat comes from the potential of a unilateral Israeli strike on Iran. In this scenario, an embattled Netanyahu government may take the ultimate decision to strike Iran’s ballistic and nuclear infrastructure if it felt that its ultimate security depended on it. There are few indications that this may happen, and there is also the possibility that a significant Hezbollah attack may lead Israel to attack Iran in self-defense. But there is no evidence of this.

My main update is in regards to Israel's potential role. Certainly and emboldened and or threatened Netanyahu administration could deploy covert means to undermine Iran's nuclear or missile infrastructure. The problem is that in my analysis I had mostly focused on conventional warfare, thinking about the years-old "doomsday scenario" in which the Israeli Airforce bombards an Iranian nuclear facility. I still that any attack is not very likely, but I now recognize a potential line of behavior that I had previously ignored. 

Overall, I believe that my previous assessment remains unchanged. A few recent developments mentioned above have only reaffirmed my assessment, and my conversation with my partners has made me believe that I am looking at the right variables. I had changed my assessment from 20% to 15% following my conversation with Rafa, and that had remained the same until I spoke with Mauricio. The risk is there, and this is confirmed by assessments made elsewhere, but the ultimate risk of this scenario seems low.

I guess the main problem in my assessment was that I was thinking too much about past debates and considerations, basing my assessment on scenarios that were inspired by outdated technological realities. In updating my assessment I am now including different possibilities.