angelshen

I remain at a 13% forecast and reject the reasoning that just because the US and Israel are 1) Iran's biggest opponents and 2) possess the ability to carry out a strike, a strike will necessarily take place. I think it's best to be cautious of the illusion of understanding.

I increased my percentage slightly since my last forecast due to the news of Biden saying that he hopes to have a ceasefire negotiated by Monday March 4. Hamas leadership have also conceded to giving up some of their demands, making a consensus easier to reach.

I was a little surprised while discussing with Jeenou to see how much we differed in terms of Brent crude oil prices. To me, 25% is a high possibility to place on the oil price surpassing $90 in the next ~month, but I guess Jeenou was more confident in its likelihood. I rely my predictions on consultants and analysts who specialize in the field – such as Goldman Sachs predicting that the price will remain in the $70-$90 a barrel trading range despite conflicts, as “OPEC+ has higher spare capacity now, which would help it mitigate any real disruptions to supply in most scenarios”.

If the IDF were to concentrate its attention on Rafah and eliminating Hamas completely like current signs suggest, a strike on Iranian nuclear facility seems unlikely.

However, Iran has accused Israel of being responsible for two attacks on gas pipelines, leading to disruptions in several provinces. While Israel has not officially acknowledged its involvement in the attacks, it has a history of carrying out actions against Iran, primarily targeting nuclear and military sites. Also, Iran's Islamic Revolutionary Guard Corps (IRGC) simulated a strike on a major Israeli airbase, showcasing its naval capabilities amidst escalating tensions in the region due to the war in Gaza. These two recent developments caused me to increase my forecast marginally, but I overall still stand by my previous forecast.

1. https://www.aljazeera.com/news/2024/2/13/irans-irgc-makes-naval-show-of-force-as-gaza-war-rages 

2. https://www.aljazeera.com/news/2024/2/21/iran-says-israel-behind-attacks-on-gas-pipelines 

Using the Market Watch tracker to aid my judgement, I stand by my forecast from last time and believe it to be unlikely for Brent Crude Oil to surpass the $90 mark in the next ~month, unless some natural disaster take place on a scale huge enough to disrupt the oil production significantly.

Since my last forecast on Feb 13th, a couple of developments took place which contributed to my current forecast predicting the chances of a month-long ceasefire between Israel and Hamas that starts before December.

First, it seems likely that Netanyahu will proceed with the alleged plans of attacking Rafah. Former Israeli intelligence official Avi Melamed said that “there is little chance that Prime Minister Benjamin Netanyahu's government will heed international criticism to call off a Rafah ground assault… Rafah is the last bastion of Hamas control and there remain battalions in Rafah which Israel must dismantle to achieve its goals in this war”, whereas Israeli Defense Minister Yoav Gallant said that Rafah is considered as the “next Hamas centre of gravity”. On top of this, the US vetoed a UN Security Council resolution demanding for an immediate ceasefire, which further signals American acquiescence for IDF strike on Rafah despite Biden’s superficial disapproval. Thus, an attack on Rafah is highly likely. (1)

Then, if Netanyahu does carry out further bombings on Rafah, there can be a couple of different outcomes, but mainly the two below:

a) IDF achieves significant victory against Hamas in Rafah, decimating its forces, and the conflict draws towards an end before Dec 1st, hence no ceasefire is necessary.

b) Mass casualties in Rafah lead to the US finally condemning Israel seriously, and ceasefire talks advance meaningfully before Dec 1st, leading to a ceasefire.

However, the ongoing negotiations for a 6 week (42 days) long ceasefire by negotiators in Paris could mean that we see a ceasefire before Rafah strikes. I expect to be more confident in my forecast after the ceasefire negotiation concludes. (2)

(3)

Updated forecast: upon discussing with Rafa and reading over his World Bank source, I made some adjustments and added at least 1% for the higher prices.

Updated forecast: I am leaning more towards the outside view that a strike is unlikely, upon discussing with Rafa and considering the fact that though there has been conflicts between Hezbollah and the US in the past, a strike on Iranian nuclear facility has never taken place. One could also see that Iran would be particularly motivated now to accelerate nuclear development when the US is stretched thin between Ukraine and Israel, with an election season coming up as well, but there’s no concrete evidence yet besides the reporting that they possess the ability to enrich uranium.

Joe Biden announced at his meeting with the King of Jordan that he is planning on curating a 6-week humanitarian pause in the conflict (https://www.timesofisrael.com/liveblog-february-12-2024/).

Though I still doubt that Netanyahu will be deterred by the humanitarian costs alone, if Biden becomes more adamant in his dissatisfaction towards mounting civilian Palestinian casualties, things might change. However, the aid bill is still making progress in the Senate, and once it passes, there will be even less of an incentive for Israel to reign in its actions.