One piece of news is dominating the markets today: the US-led attack on Iranian military leader Qasem Soleimani at an airport in Baghdad, and what this might mean for the United States and Iran from this moment forward.
First of all, we need to look at the United States and Iran’s relationship. The US has always viewed Iran as volatile due to the unique type of government the country has, as well as the fact that Iran was developing nuclear energy and possibly weapons. It was one of Barack Obama’s biggest successes as President that he convinced Iran to drop its nuclear projects in exchange for the US and its other allies removing the previously imposed sanctions on Iran. This was beneficial for Iran’s economy and international trade, and reassured other countries that Iran is not a threat.
Despite Iran’s full compliance with the deal, which was technically up for review and renewal every year, Donald Trump decided to end it at the very start of his Presidency, thus turning Iran hostile towards the United States. Over the past few months, the Iranian Islamic Revolutionary Guards, under Soleimani’s leadership, have been disrupting the oil extracting and transporting activities of US allies in the Middle East, and otherwise destabilizing the region. The United States also attacked several times, but not to this severity.
Last night Donald Trump ordered a pre-emptive strike that ended up killing Soleimani.
The Supreme Leader of Iran, Ayatollah Ali Khamenei, has criticized the move and promised that Iran will retaliate. Iran will observe several days of mourning to honor Soleimani.
The United States has not found support from its allies. The UK and the EU appear neutral, claiming that both sides need to calm down, while China and Russia feel that the United States is overstepping.
Due to the highly unstable situation this is creating in the Middle East, oil prices have spiked up today and may continue to rise if the conflict escalates.
