The price of Brent crude has risen by almost 10 percent to $122 since January this year due to instability in the Middle East, particularly fears of an Israeli strike against the nuclear development facilities of Iran. The markets are wary that even a limited conflict with that country, which is the second largest OPEC oil producer, would dramatically increase insurance on oil tankers plying the Persian Gulf.
According to Robert McNally, the president of the energy consulting firm Rapidan Group, “what we see now is a market that is very fearful and very tight. In those conditions, it doesn’t take much to send the cost of oil soaring.”
The Rapidan Group forecasts that a limited attack on Iran would trigger an oil price increase of $23 per barrel, but a more protracted conflict may cause a price spike of more than $60 per barrel. The Citigroup commodities research unit predicts that if the price of crude were to reach $150 per barrel, US economic growth would decline by two percentage points, thereby converting the nascent recovery into a recession.
If even a limited attack could cause a two-percent drop in American GNP ( the U.S. has a vast strategic oil reserve and is expected to be in a position to absorb such an economic and geopolitical shock ), can we imagine the catastrophic effects of the eventuality on a non-oil producing country like the Philippines?
We have focused our attention on the ongoing crisis in Syria and have declared a level four alert, the highest in our system, with hundreds of OFWs already repatriated to the Philippines. The situation in Syria would be a small sideshow compared to the conditions of some 2.3 million Filipinos in the Mideast in the event of an armed conflict with Iran.
I trust that the Department of Foreign Affairs, particularly through our embassies in Israel, Iran and Saudi Arabia, are closely monitoring developments in the region, especially possible hostilities over Iran’s nuclear program, and fine-tuning evacuation plans that should ideally be implemented prior to the start of a conflict.
We must keep our eyes on the ball as far as the looming crisis in Iran is concerned.
More international pressure has been made to bear on Iran in the last few months in view of apprehensions of Israel as well as the United States that Iran is bent on producing nuclear weapons. The EU has imposed a ban on crude oil imports from Iran while the US has frozen Iran’s financial assets in the United States and has warned it would take drastic steps against companies dealing with any aspect of the Iranian nuclear development program. Iran has announced it is ready to return to the negotiating table but the West believes that the former is merely trying to gain more time.
According to the Washington DC-based Center for Strategic and International Studies, a strike by Israel on Iran “will give rise to regional instability and conflict as well as terrorism.” Other think tanks specify the forms of instability and conflict that would probably emerge: the mining of the Strait of Hormuz, the launching of missiles on key population centers not only in Israel but also on other Gulf countries allied with the US, and terrorist attacks by Shiites in Sunni-dominated Gulf states.
Should these come to pass, it will spell disaster not only for the Middle East but also for the rest of the international community.
There is a time fuse that has already started to burn. For Israel, the red line is what has been described by Defense Minister Ehud Barak as the “immunity shield,” the point at which the bulk of Iranian nuclear facilities are shielded from external attack through underground or mountainside shelters. For the United States, it is the moment Iran is on the threshold of enriching uranium to weapons grade levels. The Israeli red line could be crossed within a shorter timeframe, probably anytime between now and the end of this year.
It is, therefore, imperative that international negotiators settle the crisis before the red lines of Israel or the US are crossed.
Although it is not a major player in this crisis, the Philippines must anticipate future developments and act accordingly if only because of the large Filipino community in the Middle East and the economic stakes involved.
Pinays in Iran
I visited Teheran some time ago as a member of President Ramos’ official party. What impressed me most were the Filipinas married to Iranians. They were very happy and their husbands were devoted to their wives. With all this talk of potential conflict, I pray that these Filipinas are well and safe from harm’s way.
Domingo Lee: Dyahe
Once again, the Ambassadorial nominee for China failed to pass the Commission on Appointments. What does it take to get him to voluntarily withdraw his nomination??? How embarrassing! Or as they say in Fookien, pái-sè!