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Why Oil Markets Don't Have To Worry About World War 3

In a series of moves, Trump has successfully distracted public attention from his impeachment. With some targeted strikes on Hezbollah in Iraq and Syria and the intentionally spectacular public assassination of a key Iranian general - who could have been taken out any time over the course of the past couple of years – the President has relieved much of the domestic pressure that had been building. 

Iran, too, has benefitted. What was a mass anti-government protest in Iran that forced the authorities to cut off the internet has turned into a mass funeral for General Soleimani. 

The million-dollar question since his assassination has been this: What will Iran’s response be?

That response came on Wednesday morning local time in the form of some 20 rockets fired on two Iraqi military bases housing US troops, Ain al-Asad in Anbar province and a base in Erbil, in northern Iraq, on territory governed by the Kurdistan Regional Government (KRG). 

Zero casualties were reported by both U.S. and Iraqi officials, and Trump had described the situation on Twitter as “so far, so good!”. 

What It Means

The key takeaway from these attacks is exactly what Oilprice.com highlighted in its 2019 Middle East Report: Iraq is the next big battleground in the asymmetric and proxy war that is going on between the world’s superpowers. 

World War III, as the click-bait vulnerable masses understand it, is not going to happen. The world has changed since the Second World War and we are unlikely to see anything like that again.  Related: Oil Prices Soar As Iran Fires Missiles At U.S. Base

Iran is the king of asymmetric warfare out of necessity, and out of lessons learned from the devastating Iran-Iraq war. 

The strike on Iraqi military bases housing U.S. troops was the most predictable and easiest form of retribution for Iran. 

Without causing many casualties, it serves as a very public response to a very public assassination. 

It also solidifies, for the time being, the theory that this is still a proxy war in Iraq, not World War III. 

Furthermore, it makes a response from Trump easy, so both sides can continue the retribution to their public benefit and without the gravest of consequences. 

A likely move for Trump now would be to strike at Hezbollah targets in Iraq and Syria – again - big enough targets to appear significant without pushing the countries to the brink of a hot war. 

The attacks on the Iraqi military bases were preceded by a statement from Hezbollah secretary general Sayyed Nasrallah, who described the assassination of Soleimani as a “psyop” and warned that “fair retribution” would be an end of the American military presence in “our region”. The threat explicitly ruled out any other form of attack that would target American citizens.

Official Iranian statements also noted that “any territory that is the starting point of aggressive acts against Iran will be targeted”. 

That means proxy warfare will continue. 

It also means that the Iraqi military bases, and their U.S. personnel, were already prepared for this attack. 

Nothing Is Conventional

We are already at war; it’s just asymmetric.

Asymmetric warfare arises from a situation in which the warring parties do not have equal military power, and in which conventional weapons and tactics are no longer feasible. It is the springboard for non-state actors to engage in warfare, as well. 

The assassination of Soleimai was a reflection of this. After all, the Iranian general was the key figure behind Iran’s plan to establish a Shia crescent across the region, connecting Iran, Iraq, Syria and southern Lebanon. Related: Turkey’s Energy Agenda Puts The Entire Region At Risk

Every move he has made - from organizing the brutal crackdown on anti-Iranian protesters in Iraq to recruiting Russia to Assad’s side in Syria - was towards this singular goal.

That goal requires the removal of American forces from Syria (accomplished, for the most part). Now, it requires the removal of Americans from Iraq. 

The U.S. response is also asymmetrical. 

It started before Soleimani. The event that set it off was the Kataib Hezbollah (the Iraqi arm of Hezbollah) attack on Iraqi military training facilities where U.S. personnel were present. That attack killed one U.S. contractor and wounded U.S. military personnel. The U.S. responded with two separate attacks on December 29th, bombing a total of five Hezbollah bases, killing 25 people. 

Hezbollah responded in kind, orchestrating an attack on the U.S. embassy in Baghdad, using pro-Iranian ‘protesters’. 

And the point of assassinating Soleimani (aside from other fringe benefits) was twofold: First, it removes the most important asymmetrical warfare figure from Iran’s Shia crescent portfolio; second, it is meant to act as a deterrent.

Trump is all about deterrents, as opposed to actual warfare. Twitter is very helpful in this respect.

The goal right now is a show of asymmetric power that serves as a deterrent to Iran. That’s why the Soleimani assassination was undertaken so publicly. The Iranian attack on Iraqi bases was decidedly less spectacular. Not only did the U.S. assassinate Soleimani, but it also killed the leader of Kataib Hezbollah, Abu Mahdi Al-Muhandis, a close Soleimani protege.

This is about influencing Iraq. It’s not about WWIII. And there’s absolutely nothing conventional about it. The game now is about keeping U.S. troops in Iraq. Any withdrawal of U.S. troops would be a victory for Iran, but the Iraqis will need be won over, again, and an assassination of this level on their soil has ruffled some important feathers. Iran’s next move will necessarily be to pressure that withdrawal further. 

By Editorial Department

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  • Mamdouh Salameh on January 09 2020 said:
    World War 3 it is not but it is the beginning of the end of American military presence in Iraq and the whole Middle East.

    Iraq has indeed become a major battle ground between Iran and the United States for influence with both using asymmetric warfare tactics to bolster their positions.

    This dates back to the aftermath of the US invasion of Iraq in 2003. While the United States won the military battles, it lost the war. The winners were China and Iran. China has emerged as the biggest investor in Iraq’s oil industry and also the largest buyer of Iraqi crude oil and Iran gained the political upper hand in the country.

    President Trump may have intended by the assassination of Iran’s military leader General Qassem Suleimani to curtail the growth of Iran’s influence in Iraq and assert the United States’. His tactics will most probably cost him Iraq thus giving Iran a significant strategic victory. The Iraqi parliament voted on Sunday to evict the American troops from Iraq. That would be Iran’s real revenge. For Trump like former president George W Bush, it is case of winning a battle and losing the war.

    Losing the US military presence in Iraq would be strategically disastrous not only because Iraq is important in its own right, but also because it will mean the collapse of American presence in the Middle East. Moreover, it would be a tragic irony if America’s misjudgement led to a greater Iranian control of Iraq. This will be eventually followed by the withdrawal of all American forces from the Middle East leaving it to China and Russia, Iran and Turkey to fill the political vacuum that will ensue.

    Dr Mamdouh G Salameh
    International Oil Economist
    Visiting Professor of Energy Economics at ESCP Europe Business School, London

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