WSJ: Gulf allies told to get ready for possible US strikes on Iran after midterms

Oil faces a direct upside risk here. If the US opens another front against Iran, Tehran's threat to Gulf energy sites, shipping and wider infrastructure comes back into play — a threat it has shown it is willing to act on. With Brent already sitting at about $115, a Houthi refinery claim heightening supply nerves, and OPEC+ unlikely to add barrels on Sunday, an extra risk premium may take shape before the November 3 midterms. Shipping and insurance costs in the Gulf are also at risk. Inflation would not stop at the region: pricier crude would add to the concern the RBA flagged today and create added difficulty for the Fed. The dollar could attract safe-haven inflows. Gold has often fallen in escalations as rate expectations move up.

Washington has quietly been urging Gulf allies to get ready for post-midterm action against Iran; with Tehran vowing retaliation on energy targets, crude markets have six days to price the danger.

Summary:

• Washington has asked several Gulf Arab states to be ready for a possible short, intense military action against Iran after the November 3 midterms, according to The Wall Street Journal (gated).
• People in Trump's orbit say he is inclined to hit Iranian infrastructure and nuclear sites in a big way, although no decision has been reached.
• A Patriot system is being moved into the region as the US replenishes munitions and prepares to send another carrier strike group to join about 20 warships already on station. Israel likewise has strike plans ready.
• Military plans were not something the White House would discuss; it said every option stays available to prevent Iran from obtaining a nuclear bomb.
• Iran has warned that economic and civilian targets across the region would be hit, and it still possesses hundreds to thousands of missiles.
• Mediators are seeking to restart talks, but progress so far has been limited.

The Wall Street Journal reports that several Gulf Arab states have been told by the US to prepare for a possible short but intense military operation against Iran after the US midterm elections, citing people who were briefed on the exchanges.

These alerts have been sent via both diplomatic and military routes, and the Journal sees them as part of an expanding set of indications that Washington and Israel are getting ready for another stretch of heavy combat intended to weaken Iran and drive it to negotiations. Donald Trump has yet to settle on a course, according to those who know his thinking, but he is inclined toward a substantial post-election assault that might strike Iranian infrastructure and nuclear sites. The president has promised that no attack on Iran will come before the November 3 midterms.

Steps are already being taken militarily to hand Trump a range of choices. US officials cited by the Journal say a Patriot missile defence system is being relocated from Texas to the area and troops have been pulled off bases seen as vulnerable. Munitions are being restocked, bombers and fighters are getting ready for action, and an extra carrier strike group and Marine expeditionary unit are poised to join roughly 20 other US warships in the Middle East next month. Israel, the Journal reported, has its own plans and targets prepared for a new offensive, with Prime Minister Benjamin Netanyahu still pressing for strikes.

In response to questions about possible military plans, the White House declined, calling them sensitive and saying they may or may not exist, while adding that Trump keeps every option on the table to ensure Iran never gets a nuclear weapon. At a rally last week, Trump said the US might conduct another limited version of the spring bombing campaign, called Epic Fury, if Iran does not agree to a deal.

Renewed bombing would represent a departure from the administration's economic pressure campaign, under which months of tighter sanctions and a naval blockade have halted Iran's oil sales. Analysts cited by the Journal questioned whether a new round of strikes would work. One argued that sanctions and the blockade already give the US a winning hand, while a former Israeli military intelligence official said more bombing could entrench Tehran's position on its missile and nuclear programmes rather than bringing down the government.

Iran has warned that any attack would be answered with strikes on economic and civilian targets across the region, just as earlier in the war when US bases, energy installations and airports around the Gulf were hit. The country still has hundreds to thousands of missiles in reserve and is assembling new ballistic missiles from stockpiled parts, according to the Journal, even as the US and Gulf allies work to restore missile defences that Iranian strikes have depleted.

Mediators in the region are attempting to bring negotiations back to life to prevent another conflict, but they have little progress to show. Washington is insisting that Iran's nuclear programme be discussed, while Tehran is setting strict conditions for a return to the table. With the midterms less than a week away, the room for diplomacy is shrinking.