With America heading into the Midterms, Iran is seizing the initiative across the Middle East. Gone are the days when Iran merely retaliated for US and Israeli attacks or engaged in tit-for-tat demonstration strikes.
From attacking a US carrier to declaring a new restriction zone in the Gulf to its ally the Houthis seizing control of the key Red Sea chokepoint to Iranian-backed militias in Iraq shutting down the crucial East-West pipeline, Iran is escalating.
Markets are reacting sharply – with brent crude surging to ~$108 and US gas prices up 8% to $4.32 a gallon, up from $4.01 just before Labor Day, and diesel skyrocketing to $6 a gallon. Iran’s escalating disruption of crude has overwhelmed normal seasonal drops in gas prices with the most expensive September on record.
These developments follow the strategy I have been tracking for months: Iran exploiting its period of maximum leverage to turn military disruption into economic and political pressure.
Alas, Iran may well have more coming.
Indications are growing of an Iran “October Surprise” -- a sudden major escalation occurring in October – just weeks or days before the US midterm elections – that has the potential to sway voters and alter the outcome of the race. If so, this would leave the Trump administration and affected candidates little time to respond. Indeed, the phrase was coined by William Casey, the campaign manager for Ronald Reagan, about a last-minute release of the US hostages then held by Iran (the timing of which Iran did manipulate to wreck Jimmy Carter’s presidency).
Here’s what Iran’s next October Surprise may well look like – and the three warning signs I’m watching now.