Current geopolitical tensions between Iran and US indicate continued contained confrontation

Firas Modad, director of Middle East country risk at IHS Markit, gives his take on recent tensions in the region

IHS Markit, Soleimani, Attacks, Javad Zarif, Donald trump

On 8 January 2020, Iran struck the US and Iraqi al-Assad Airbase in Anbar, and the US airbase at Erbil International Airport, using up to 22 Qiam ballistic missiles, of which four some fell short. Iranian Supreme Leader Ali Khamenei confirmed the strikes as Iran’s retaliation to the US assassination of Islamic Revolution Guard Corps (IRGC) Qods Force commander, General Qassem Soleimani, on 3 January.

Iranian Foreign Minister Javad Zarif added to Supreme Leader Ali Khamenei's statement, saying that they "do not seek escalation or war". The Iranian claim of 80 US casualties is almost certainly false. Iraq stated that Iran had notified it of the strike in advance, indicating that Iran intended to minimise casualties.

Trump's preference for a withdrawal from Iraq that secures US commercial interests, and the two sides' re-establishment of deterrence, point to a controlled confrontation. By killing Soleimani and engaging in airstrikes against Iran-aligned militias, the United States highlighted the direct costs to the Iranian leadership of continued escalation. With the 14 September Abqaiq attack in Saudi Arabia and ballistic missile strikes on US bases in Iraq, Iran demonstrated to the US that the cost of escalation would be high to the US as well, but that Iran is undeterred despite the devastating cost of a full-scale conflict.

These factors point to a likely continuation of the current status quo of inconclusive confrontation between the two sides, falling short of an all-out war. This is further supported by President Donald Trump’s statement on 8 January 2020, which focused on Iran’s support for terrorism and its nuclear programme, but, interestingly, dropped references to Iran’s ballistic missile programme. President Trump’s statement also shows that US energy independence make the US less interested in engagements in the Middle East, and more interested in an agreement with Iran, rather than war. However, statements from Supreme Leader Khamenei show that Iran is as of yet unwilling to negotiate, despite the major impact that sanctions have had on Iran’s economy.

Gulf Arab states have made clear that they are not interested in a full confrontation, which is likely to mitigate the intensity of the potential US response. On 7 January, Saudi Arabia dispatched the deputy defence minister, Khaled bin Salman, who is the younger brother of de-facto ruler Crown Prince Mohammad bin Salman, to meet with President Trump to call for de-escalation. The Emirati energy minister, Suhail al-Mazroui, said that the United Arab Emirates does not expect a situation that would lead to energy supply shortages, indicating lack of interest in escalation. Gulf states are likely to put pressure on the US to avoid further escalation.

The risk of escalation remains as Shia groups loyal to Iran are likely to launch an insurgency against the US, and further Iranian strikes against Gulf States are likely. Iran's allies in Iraq are almost certain to launch an insurgency targeting US soldiers in Iraq. Furthermore, Iran is likely to seek to force Gulf Arab states to review their cost-benefit analysis of the US presence by raising the cost of that presence through attacks, directed through its proxies, targeting US bases and local infrastructure. This leaves a latent risk of further escalation due to miscalculation by the various sides, even though the most likely scenario in our assessment remains a controlled confrontation. Furthermore, Iran would only return to the Joint Comprehensive Plan of Action (JCPOA) and de-escalate on the nuclear issue if the US were to first reduce sanctions.


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Oil & Gas Middle East - September 2020

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