Could the U.S. election outcome affect the Middle East conflict? If so, how, and what would this mean for oil prices?
These were the questions Rigzone posed to Ryan Bohl, Senior Middle East and North Africa Analyst at RANE, which describes itself as a global risk intelligence company.
“The U.S. election will definitely have an impact on the contours of conflict within the Middle East,” Bohl told Rigzone, responding to the questions.
In his response, Bohl outlined that a Kamala Harris victory would have suggested “a greater likelihood of Washington intervening by restraining Israeli behavior and attempting to cause de-escalation from Israel’s side”.
Bohl highlighted to Rigzone that, “while this would not be a guaranteed success and would likely be subject to the same political strains that have prevented the Biden administration from taking too strong a stance against Israel”, the Harris campaign would “be under increased domestic pressure from its political base to end the regional conflict and in particular to restrain Israeli behavior”.
The RANE representative outlined to Rigzone that the Trump administration will be more unpredictable “[in] a number of ways”.
“While Trump is stridently pro-Israel, he has also stated that he believes that the war in Gaza should come to an end sooner rather than later,” Bohl noted.
“He also showed restraint from escalating against Iran during his first term, suggesting that he would not rapidly escalate against Tehran or necessarily shift much beyond America’s currently robust defensive strategy in the region,” he added.
“It … [will] not be a given that Trump … [will] bring increased hawkishness against Iran,” he continued.
Bohl did state, however, that Trump “was quick to respond to provocations and fast to both rhetorically and tactically escalate in response”.
“A Trump administration … [will] likely apply both back door and public pressure on Israel to end the war in Gaza, but [is] not as likely to use arms control tactics to do so,” he added.
“In addition, a trump White House might rapidly escalate against Iran or its proxies should one of their strikes in the course of events directly impact Americans,” he continued.
Oil Price Effect
Looking at the effect on oil prices, Bohl said “much of this is going to be contingent on the perception of whether or not the Gulf Cooperation Council’s (GCC) oil infrastructure is becoming a target of Iranian missiles”.
“The oil markets have largely gauged that Iran has no direct interest in striking the GCC itself, in large part because this would be a major setback for Iran’s diplomatic strategy as well as a broadening of the regional coalition seeking to contain and even topple the Islamic Republic,” he added.
“Nevertheless, oil markets are more likely to be disturbed under the volatility of a Trump administration, in part because of his preference for sudden and erratic policy making and his decisions to rapidly escalate tactically in games of brinksmanship with Iran,” he continued.
Bohl told Rigzone that such tactics are more likely to cause a miscalculation that would then climb the escalation ladder in the direction of a regional war that involves the GCC.
“This is most likely the most important driver towards oil price increases from changes in American policy towards the regional conflict,” Bohl highlighted.
The RANE representative went on to warn that oil markets may be disturbed regardless of who is in the White House.
“The tit for tat exchanges between Israel and Iran have their own independent potential to continue to escalate to the point where Iran decides to rattle global oil markets in order to force Washington to restrain Israeli military behavior,” Bohl said.
Rigzone has contacted the Trump and Harris campaigns, and the White House, for comment on Bohl’s response. At the time of writing, none have yet responded to Rigzone.
GCC member states comprise the United Arab Emirates, Bahrain, Saudi Arabia, Oman, Qatar, and Kuwait, the General Secretariat of the GCC website shows.
Trump and the Middle East
In a market analysis sent to Rigzone on November 8, Samer Hasn, Senior Market Analyst at XS.com, said, “we do not find any certainty regarding the possible steps that Trump may take towards the Middle East front”.
“The escalation of the conflict between Iran and Israel may lead to the disruption of oil supplies from the region, which may lead to a rise in inflation again, which is what Trump may not want. This is because reducing fuel prices is a major part of Trump’s plan to reduce inflation,” he added.
“On the other hand, Trump’s intention, at least the declared one, to de-escalate the situation in the region may clash with the desires of Israeli Prime Minister Benjamin Netanyahu and behind him the far-right coalition who call for expanding the war and are counting on the Republican administration to give them a free hand in the region,” he continued.
“These conflicting interests may keep the uncertainty high in the markets,” Hasn went on to state.
Rigzone has contacted the Trump campaign for comment on Hasn’s analysis. At the time of writing, the Trump camp has not yet responded.
In a separate analysis sent to Rigzone on Monday, Joseph Dahrieh, Managing Principal at Tickmill, noted that, “while geopolitical tensions have injected some volatility into the market, the overall impact on oil supplies has been limited thus far”.
“The ongoing geopolitical situation could introduce some short-term risks but is unlikely to lead to a sustained bullish trend in the global crude oil market in the near to medium term, as demand concerns continue to outweigh geopolitical developments,” he added.
In another market analysis sent to Rigzone last Thursday, Antonio Di Giacomo, Senior Market Analyst at XS.com, said, “instability in the Middle East, particularly the possibility of a more significant conflict between Iran and Israel, poses a risk that could disrupt operations at Iranian oil facilities, affecting supply and thereby influencing prices”.
The U.S. election took place on November 5. Trump won this election with 312 electoral votes to Kamala Harris’ 226, RealClearPolitics and 270towin, which both describe themselves as non-partisan, show. The total number of electoral votes is 538, with a minimum of 270 needed for a majority, the National Archives and Records Administration (NARA) website outlines.
To contact the author, email andreas.exarheas@rigzone.com