Energy markets D-Day or N-Day? The considerations of an Iranian puppet?

The ongoing Israeli war on Palestinian terrorist organization Hamas, after the massacre by the latter of Israelis on October 7, is currently considered by oil and gas markets as a contained semi-regional conflict. As long as other main parties, especially Lebanon’s Shi’a fundamentalist extremist group Hezbollah or Iran are not involved directly. The chance of a 3rd front for the Israelis however is still on the mind not only of Western leaders but increasingly of Arab countries too. The impact of the missile and drone attacks by Iranian proxy Houthis in Yemen on Israel has put several Arab armed forces on high alert. At the same time, American forces throughout the Middle East are under attack by Iranian supported militias in Iraq and Syria. Still, energy markets are not stressed, as shown by oil and gas prices currently. Geopolitics and security are sometimes wolves in sheep clothes.

Under the radar of international media, analysts are very worried about the impact of Hezbollah leader Nasrallah to intervene in the Gaza crisis. Until now, the Shi’a extremist leader has been extremely quiet, most even say he is hiding his real intentions, not to awaken a Western response before it matters. Without even a real sign of life, Nasrallah, well-known for his extremist aggressive speeches and strategies, is the unknown or even unseen decisionmaker about the future of the current conflict. Since the Hamas atrocities on Israelis, military analysts in Israel, Saudi Arabia, USA, UAE and even Russia, have been trying to decipher the strategic position of Hezbollah’s power brokers. As reported the last days by Arab, Israeli and Western military sources, Iran’s IRGC leaders have been moving to the border regions of Israel in Syria and Lebanon. Key military operators of the IRGC are currently in talks with Hezbollah, and its other proxies, all setting up a military strategy if necessary. As Iran is increasing the pressure on American forces in the Middle East, Iranian proxies are joining officially the Hamas side, as shown by the Houthis and others, all expect a clear and present danger in the next couple of days. The main cliffhanger of all is where is Sheikh Nasrallah?

The coming days the possible road to escalation will be clear. According to pro-Hezbollah news site Al Mayadeen, Sheikh Nasrallah will be holding a speech on Friday, 3PM Israeli time, officially at a ceremony to honor the “martyrs who died on the road to Jerusalem”. ?The fact that the Hezbollah leader has not been speaking to his militia since the start of the Gaza war is a sign that a major decision seems to have been taken. The main worry for the Israeli and US-sides is the increased presence of IRGC personnel and leadership in Lebanon at present. At the same time, there are major military-linked movements ongoing on Syrian territory towards the Israeli border or Golan Heights. US intelligence also has warned for growing activities and even major movements between Iraq and Syria-Lebanon of militias and IRGC operators.

Until now, the border between Lebanon and Israel has been heating up, but still not to a level that major confrontations are ongoing. Hezbollah has been active by sending missiles and drones to hit Israeli cities but the level of engagement still minimal. Israeli military responses towards Lebanon have been subdued. ?On a larger scale Hezbollah has been warned by the USA already to remain on the sidelines, while Arab countries also have been increasing the pressure on them. ?

Arabs and Israelis will be watching any news linked to the Nasrallah speech on Friday with anticipation, but until now even Arab news agencies such as Qatar’s Al Jazeera or the Iranian TASNIM network have not been able to divulge more.

Looking at the larger picture, the Israeli-Lebanese border is heating up, with the scale of border clashes increasing. All agree that it is not yet an all-out war with Hezbollah, but the level of contact is getting hot. The last three days actions taken by both sides have been spread behind the real border. Both are now active beyond the 2-4 kilometers border regions on both sides. Al Jazeera reports that Israel is hitting targets up to 16 kilometers into Lebanon, while Hezbollah has been active until 14 km into Israel. Both have been rather taking a very light approach, as shown by Hezbollah only using drones and antitank guided missiles. The last days however Hezbollah and proxies upped the ante by using surface-to-air missiles. Lebanese government officials are very worried that the country will be involved in a war with Israel again. Most Lebanese are not supporters of Hezbollah, Iran and even Syria, but the Lebanese shi’a group holds a vaster military power than the Lebanese armed forces and all other militias together.

Worrying signs are on the horizon, especially that Hamas leaders, and other Palestinian groups, have visited the last days with the Hezbollah leadership, officially to discuss ‘an all-out victory’ over Israel. The current silence of Hezbollah is not a sign of weakness, but it seems the extremist group has been slightly surprised by Hamas actions and is now assessing how to take the lead in the anti-Israeli block again. By teasing the public the last days, Nasrallah’s video’s shown on the internet and channels is a sign of something major brewing. Hezbollah can’t sit still longer, as its overall leading position of the main Israeli foe is crumbling, which Iran for sure is not willing to have too.

It is very likely Hezbollah will be increasing its attacks on Israel the coming 48 hours, but a decision for a full-scale escalation needs to come from Nasrallah. The latter should not be taken lightly, as this will not only involve a major 3rd front, but also push its proxies worldwide and its existing Hezbollah-IRGC international network in the Middle East, Africa, Latin America to become active too. An involvement of Iran is clear, if Hezbollah, which is Iran’s main power base in Lebanon and Syria, is under fire. Looking at the Gaza operations of Israel, the time to strike could be very enticing for the anti-Israeli extremists. These parties also need now to show their power, as Hamas already has already questioned their resolve. Arab sources even have stated that Ahmed Abdel Hadi, Hamas’s representative in Lebanon, stated recently: “Iran betrayed the Palestinians and Hamas.” This has put extra pressure on Tehran to consider more actions very soon.

As a major analysis by Benjamin Allison of the University of Texas in The Lawfare Institute stated in an article the last days “the most dangerous regional militant group is the Lebanese Hezbollah. The group possesses a massive rocket and missile arsenal as well as drones, and some of these systems are highly accurate, in contrast to most of Hezbollah’s traditional arsenal.”Of particular concern is that Hezbollah has possession of a formidable arsenal of precision guided munitions (PGMs), rockets, and drones. The former commander of the Israeli Air Force, Brig. Gen. Shachar Shohat, has dubbed PGMs “the air force of terror organizations,” while Israeli military analyst Yaakov Lappin?suggests?that Hezbollah’s PGMs are “Israel’s leading conventional security threat, surpassed only by Iran’s nuclear program.”

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At present, some estimates are that Hezbollah between 130,000-150,000 missiles and rockets, others state 70,000, with most of those being short-range rockets and missiles. Most of them have come from Iran. In addition to them, Hezbollah also various anti-ship missiles, which could potentially include the?Russian Yakhont cruise missile, , the most advanced anti-ship missile on Earth. Sources also claim the group has around 2,000 drones, with ranges between 50-2,400km).

Taking this into consideration, oil and gas markets should be reassessing options, while becoming again so confident and reactive. Decisions in the Middle East by Iran and its proxies will be vital to understand markets the coming weeks and months. A potential firebrand as Nasrallah could not only cause a major regional war, but also bring oil and gas supplies to a halt. Actions by Israel, and potentially USA and others, are in the offing, but could be much more devastating to the optimism in hydrocarbon power centers than they want to admit. Friday could be “Decision-Day or Dooms-Day” for markets, but for sure a “Nasrallah-Day”.

A more sanitized version has been published already via Oilprice.com