US-Iran War Outlook Grows More Complex as Energy Supply and Global Inflation Risks Rise

Daily News

Summary:

Trump says he will decide whether to resume large-scale military operations; Iran says the Strait of Hormuz will not reopen until Trump and Netanyahu leave office...

【Highlights】

1. Trump says he will decide whether to resume large-scale military operations

2. US imposes new sanctions on Cuba targeting its mining and military sectors

3. Saudi Arabia and Houthis clash again as Trump prepares to make a major decision on Iran

4. JPMorgan acknowledges US-Iran war could drag on, with supply disruptions unlikely to be temporary

5. Bank of England warns prolonged Middle East conflict could force it to raise rates

6. Iran says Strait of Hormuz will not reopen until Trump and Netanyahu leave office

7. BOJ expected to raise rates to a 31-year high as markets focus on Ueda’s policy signals

【Details】

Trump Says He Will Decide Whether to Resume Large-Scale Military Operations

According to Axios on September 17 local time, US President Donald Trump told the news outlet that he is facing a critical turning point in the war with Iran and must decide whether to resume a large-scale offensive in an effort to bring the conflict to an end.

Trump was quoted as saying, “I’m about to make a big decision. Do I wipe out the Iranian regime? It’s going to be a big decision.”

Axios reported that Trump plans to meet with the leaders of six Gulf countries in New York next week on the sidelines of the United Nations General Assembly. The meeting could shape the next phase of the war, including whether to pursue another diplomatic solution or escalate military action.

If Trump wants to resume large-scale military operations, he would need the support of regional allies. Trump has repeatedly said in recent days that the war will end soon. However, some US officials have warned that Washington and Tehran have become locked in an unsustainable stalemate between war and peace. They believe that if an agreement is not reached, Trump could resume large-scale military operations against Iran after the midterm elections.

US Imposes New Sanctions on Cuba Targeting Its Mining and Military Sectors

According to a fact sheet emailed by the US State Department, the United States is sanctioning eight entities and three individuals as part of the Trump administration’s efforts to bring an end to what it describes as the Cuban regime’s malign activities.

The statement said the latest measures target Cuba’s nickel-mining system and military-industrial complex. Pinares SA, a Cuban state-owned mining company, was added to the list of sanctioned entities.

The Treasury Department described some of the sanctioned entities as state-owned research and experimental development institutions.

Saudi Arabia and Houthis Clash Again as Trump Prepares to Make a Major Decision on Iran

Saudi Arabia and the Iran-backed Houthi movement in Yemen exchanged cross-border attacks again, while Yemeni civilians fled the fighting by boat across the Red Sea.

Saudi Arabia’s civil defense authorities said a Yemeni resident of Saudi Arabia was killed after being struck by debris from an intercepted drone over the western city of Taif. It was the first time since the conflict escalated last week that Saudi authorities reported a death caused by a Houthi attack.

US President Donald Trump said he was about to make a major decision on whether to resume large-scale strikes against Iran.

JPMorgan Acknowledges US-Iran War Could Drag On, With Supply Disruptions Unlikely to Be Temporary

More than six months after the United States launched its war against Iran, oil analysts at JPMorgan said it is becoming increasingly difficult to predict when the conflict will end.

In a report, the analysts said several economic thresholds that JPMorgan had previously believed the US government would avoid have now been breached, including oil prices rising above $100 a barrel, gasoline prices approaching $5 a gallon and a sharp rise in Treasury yields. These developments have made an exit strategy increasingly uncertain.

The analysts said they were becoming increasingly unsure how long the war with Iran could last. Surging energy prices threaten global economic growth and could intensify inflationary pressures, while recent attacks on critical energy infrastructure, including Saudi Arabia’s vital East-West oil pipeline, have heightened concerns about further supply disruptions.

They noted that neither the United States nor Iran has sent clear signals that they are prepared to de-escalate the situation. If the Xi-Trump meeting on September 24 fails to produce a diplomatic breakthrough, the assumption that supply disruptions will be only temporary will become increasingly difficult to sustain.

Bank of England Warns Prolonged Middle East Conflict Could Force It to Raise Rates

The Bank of England voted 6-3 at its latest policy meeting to keep its benchmark interest rate unchanged at 3.75%, in line with broad market expectations.

Bank of England Governor Andrew Bailey said in remarks that the global energy shock had so far had a limited impact on UK prices and wages. However, he warned that the longer the volatility persists, the greater its impact on inflation will be, and the greater the likelihood that the Bank will need to raise interest rates.

The Bank of England also abandoned plans to sell long-dated UK government bonds and said it would gradually reduce its £488 billion ($653 billion) bond portfolio, with the process scheduled to be completed by September 2034.

Traders have reduced their bets on further rate hikes. Markets are now fully pricing in one rate increase by the end of the year, while assigning a 50% probability to another hike.

Iran Says Strait of Hormuz Will Not Reopen Until Trump and Netanyahu Leave Office

Iran has further escalated tensions with the United States and Israel, directly linking the reopening of the Strait of Hormuz to the departure from office of Trump and Israeli Prime Minister Benjamin Netanyahu.

The warning came from Mohammad Bagher Zolghadr, a political adviser to Iran’s Supreme Leader, as regional tensions continued to intensify and traffic through the strategic maritime chokepoint remained severely restricted.

The Strait of Hormuz connects the Persian Gulf with the Gulf of Oman and is one of the world’s major routes for oil and natural gas shipments.

Commercial traffic has fallen sharply in recent days. Preliminary maritime tracking data showed that only three commercial vessels passed through the strait on Wednesday.

Iran has claimed responsibility for attacks on 10 vessels and continued to tighten navigation restrictions in the area in an effort to increase pressure in the conflict.

BOJ Expected to Raise Rates to a 31-Year High as Markets Focus on Ueda’s Policy Signals

The Bank of Japan is expected to raise interest rates on Friday, September 18, to their highest level in 31 years and signal that further measures could be taken to address inflation risks.

The move would mark the first rate hike in three months and bring the policy rate closer to the level the BOJ considers neutral for the economy.

Analysts said the Federal Reserve’s rate hike on Wednesday, along with the prospect of another increase later this year, has added pressure on the BOJ to follow suit.

Markets will closely watch BOJ Governor Kazuo Ueda’s press conference for clues about the timing and pace of any further rate increases.

Today’s Key Events

11:00 (UTC+8) Bank of Japan September Interest Rate Decision

14:00 (UTC+8) Germany August PPI MoM

14:30 (UTC+8) Bank of Japan Governor Kazuo Ueda’s Monetary Policy Press Conference

21:15 (UTC+8) US August Industrial Production MoM

22:00 (UTC+8) US August Conference Board Leading Economic Index MoM

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