By Steve Hynd
I've a post up at The Agonist today wondering if the time has finally come for the West and Iran to either do a deal or go to war. Trita Parsi says it has and I'm inclined to agree.
But if the first order consequences of attacking Iran have been well covered by many, second order and further consequences ar harder by their very nature to predict and have not been well explored in the media. Previous wars in the region have shown that events which interrupted between 4 and 7% of the world's oil supply caused price spikes of between 25 and 70%. Iran accounts for 5% of the world's supply and all the oil flowing through the Hormuz Straits comes to 20% of that supply. At some point, if oil hits a sustained price of over $110 a barrel and before $150 a barrel, the global economy begins to break down. At over $150 a barrel for a long period, we can expect a worldwide economic crash. The current price of oil is around $100 a barrel. The math is easy. here.
I'm torn between coming across as too alarmist and calling the potential oncoming disaster what it is. We don't need Mutually Assured Destruction between Cold war superpowers to cause the downfall of modern civilization any longer. If the world pitches into a massive economic crash right now - with the debt-ridden nations of Southern Europe leading the way - it won't recover in time before global warming and peak cheap oil really begin to bite, causing their own massive economic impact. It may not be an exaggeration to say these talks constitute a threshold.