Iran air strike bets on the rise
Investors are placing larger bets on the chances of an Israeli or U.S. air strike on Iran by the end of the year after a bomb on a bus carrying Israeli tourists in Bulgaria killed seven people yesterday.
Israel’s prime minister Benjamin Netanyahu said “All the signs lead to Iran”, though Defence Minister Ehud Barak sounded more restrained and Iran denied responsibility. Oil hit a seven-week high above $106 a barrel on supply concerns over tensions in the region.
Dublin-based online exchange intrade.com sees a 26.5 percent chance of an air strike on Iran by Dec 31, compared with 25 percent a couple of days ago.
Oil has been on a winning streak this month since Iran once more threatened to close the vital shipping route of the Straits of Hormuz following the imposition of EU sanctions on July 1.
Meanwhile, geopolitical risk is rising over Syria, where the situation “rapidly spinning out of control”, according to U.S. Defense Secretary Leon Panetta, after the assassination of three of the regime’s top lieutenants yesterday.
Analysts are speculating that Syria’s chemical weapons could be used, either by the existing regime or by rebels.
According to political risk consultancy Maplecroft:
The possibility of militant Islamist groups acquiring weapons and increasingly sophisticated weapons reaching militants in neighbouring states such as Iraq and Lebanon…remains a significant concern
Risks of an air strike on Iran are not huge but they are a possibility, writes Emad Mostaque, Middle East and North Africa strategist at Religare Capital Markets.
Iran would not use WMDs in our opinion if it got them, but we are pretty sure most jihadist groups would. An Israeli airstrike on these facilities remains unlikely, but more jihadist attacks on Israel and Israelis will up the ante on Israel’s need to defend itself in a pre-emptive and very severe manner.