De-escalation in the Middle East

After the US killed Soleimani, there was a fear that it could lead to a start of a war between Iran and the US. That fear seemed very overblown when Iran came with their revenge action. The revenge was nothing more than shooting some missiles towards at least two Iraqi bases where US military was based. They did not kill any US soldiers, neither did they damage much. It was a very weak revenge for the killing of Soleimani. It is very clear that Iran does not want a war.

War is in nobody’s interest

Obviously, Trump was happy with this weak revenge. Trump also has no interest in a huge escalation with Iran. He needs to get reelected, and these kind of Middle East wars have not brought much positive in the last twenty years. Trump killed an important terrorist and shows the American people that he is the boss and Iran cannot do much against him.

Commercial airplane shot down

Iran shot down a commercial air plane. It was very shortly after the revenge attack. Iran said they thought they were under attack by the US. They thought the US fired a rocket towards the regime. This was not the case. It was not a rocket, but a commercial airplane.

A disaster. 176 people died, of which many were Iranians living in Canada. A disgrace. Before the US found out that Iran shot down a commercial plane, Iran said it was impossible that one of their missiles hit the plane. Very stupid, everyone knows that this is easily checked with the satellites that the US has.

Did Iran really shoot down the plane unintentionally?

It is not unlikely that Iran shot the plane down on purpose. To get the people’s attention to a different topic. Away from the very weak revenge strikes after Soleimani was killed, towards the tragedy of an airplane that crashed near Teheran. Maybe the Iranian regime wanted to shift this war focus to a mourning focus and in that way easily get away with their military weakness. The regime is worse than worse and willing to do whatever they need to save their face.
It is not that unlikely, but obviously a stupid move. Would anyone believe that the airplane was not shot down after investigations would have been done? Currently, the Iranian regime has to deal with a new wave of protests. Previous protests regarding increasing fuel prices, they could blame on the US sanctions. For current protests there is no one else to blame than the Iranian regime. How are they going to deal with that? Are they again going to shoot down protesters? Maybe they need to shift the attention again to a different topic?

Stock markets relieved

The financial markets have been relieved by the de-escalation of Middle East tensions. Meanwhile the oil price showed a large decline during the second half of last week. Oil had spiked before as the Middle East is a very oil producing heavy region and a chance for a war could put a lot of pressure on the oil production and transportation.
For the moment I expect the financial markets to watch the Middle East situation closely, but to not worry too much. Unless an attack happens where the US suffers. I do not think the markets will be too upset by threatening words between the US and Iran. That is expected to keep on happening now and then. Last couple of days has made clear there is a huge difference between threatening language and an actual act of war.

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