Latest Developments in Iran Conflict: Saudi Arabia, UAE Reportedly Considering Joining War Against Iran

Investing.com - Reports indicate that multiple regions in the Middle East were hit by missile attacks on Tuesday. After the U.S. and Iran gave very different statements regarding potential negotiations to end the nearly month-long war, two major Persian Gulf countries are reportedly considering joining the conflict.

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Israeli authorities stated that a large number of missiles from Iran struck Tel Aviv and other parts of the country, according to The New York Times.

Meanwhile, The Wall Street Journal reported that Kuwait and Saudi Arabia have become targets of drone and missile attacks, while Israel announced it had struck targets related to Hezbollah supported by Iran inside Lebanon.

Importantly, the Strait of Hormuz, a vital waterway in southern Iran that carries one-fifth of the world’s oil shipments, is currently almost completely halted. The actual closure of this strait has become a major flashpoint in the joint U.S.-Israel efforts to strike Iran, restricting the flow of critical supplies to countries worldwide, especially major energy importers in Asia.

The economies of Saudi Arabia and the United Arab Emirates heavily depend on energy transportation through the Strait of Hormuz. According to The Wall Street Journal, these two countries are gradually leaning toward joining the fight against Iran.

The paper cited sources saying that Saudi Arabia has decided to allow U.S. forces to use an airbase on the western side of the Arabian Peninsula, with Crown Prince Mohammed bin Salman eager to make a decision to join the attack. The Wall Street Journal also reported that the UAE has begun targeting assets owned by Iran.

Oil prices rose again above $100 per barrel after a previous trading day saw a sharp decline when U.S. President Donald Trump announced a five-day delay in striking Iran’s electrical grid. Trump said this decision was due to discussions with Iran, which he described as “productive” and “very strong.”

However, Iran’s parliament speaker denied that such negotiations were taking place and accused Trump of fabricating the story to help ease tensions in the financial markets.

U.S. stock index futures declined, after the three major Wall Street indices had all risen in the previous trading day.

As of 05:49 a.m. Eastern Time (18:49 Beijing Time), May-dated Brent crude futures rose 1.74% to $101.68 per barrel. Although this is below the nearly $120 per barrel level reached recently, Brent crude remains well above the approximately $70 per barrel level before the outbreak of the Iran war in late February.

Benjamin Schroeder, a senior interest rate strategist at ING, said in a report, “Just as the market fears the worst, hopes for an end to the conflict pull them back from the edge.”

The continued high oil prices are heightening concerns about rising global inflation pressures, which could force central banks around the world to consider rate hikes. Fatih Birol, Executive Director of the International Energy Agency, warned on Monday that the current energy shock is more severe than similar shocks in the 1970s.

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