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‘PRAY THAT US-IRAN ‘CONFLICT’ SUBSIDES’

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MBABANE – Political analysts have advised that Eswatini must pray for the simmering tension between the United States of America and Iran to subside or else tough times will lie ahead.


This is because international political analysts have predicted that the US-Iran war has the potential of being one of the worst conflicts in history, with dire consequences for Africa, and Eswatini by extension.


The country does not have commodities such as oil and other minerals apart from imports from neighbouring South Africa which also imports from oil rich countries. The killing of Major General Qassem Soleimani, who led Iranian covert operations and intelligence and was one of the country’s most senior leaders, has escalated war between Washington and Tehran. Experts advised Iran had every incentive to retaliate, using its proxies to target US commercial interests in the Middle East, American allies, or even American troops in regional bases.


Political commentator Dr Qambukusa Magagula, giving a speculative analysis, said in the long run, if the war were to intensify, it was a given that this would trigger the oil prices, which are linked to the costs of many other commodities.
“High oil prices can easily trigger the increase in the prices of transportation and other things linked to it such as bread. The likeliness is very significant in the long run, should the war escalate.”


Starts


He said once a war starts, it was a given that other world economies would take the tub.
“We have an example in the nearby Mozambique, which went through a civil war that left the country in tatters. If the Middle East is at war, then certainly we would be affected by such a war.


He said though Eswatini was hardly capable of influencing the superpowers, it could utilise regional power blocks such as SADC to persuade the countries that are threatened with war to go for dialogue.


He said it was the powerful nations of the world who were better placed to play a mediatory role in ensuring that the war is averted.
Meanwhile, an economic analyst said the oil prices were currently not affected because the western nations, such as the USA, were starting to produce oil for export too, and that they had discovered some oil fields in less war torn states.


Meanwhile, Econometrix chief economist Dr Azar Jammine recently told Biz News that the implication, for the South African economy, on the latest stand-off between the United States and Iran was unclear.


“Theoretically, if this leads to a surge in international oil prices, this could have negative implications for global economic activity and through this for the demand for South Africa’s raw materials. On the other hand, increased tensions have been causing precious metals prices to rise, helping to neutralise the negative impact of the increased cost of oil imports domestically.


Uncertainty


“The uncertainty surrounding the implications of the latest global tensions is manifested in the volatility of the Rand and precious metals prices in the last few days. There is clearly still significant support for financial markets, and risk appetite for higher yielding emerging market assets and their currencies seems to be continuing,” he said.


He further it was fair to suggest that the simmering war could lead to significant volatility in financial markets and the Rand in coming months. He said the Rand may still not be ready to depreciate immediately, but there was a meaningful risk of a significant sell-off in the Rand in coming months in the event of global risk appetite souring.


It was said that Iran has the potential to produce up to 3.5 million barrels of oil per day, equivalent to 3.5% of global demand and around 12% of OPEC supply.
Following the decision four years ago by the US to impose sanctions on any country dealing with Iran, South Africa ceased purchasing its oil from Iran and switched to other sources such as Nigeria, which has become the country’s fifth largest source of imports.


A US military official said this week that 11 service members had been injured in the attack, which was launched in retaliation for the US airstrikes that had killed Gen. Soleimani the previous week.



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