Is the Economy Facing Another Energy Price Shock?

BBC: Both Prime Minister Rishi Sunak and US President Joe Biden cited the global economic impact of Houthi attacks on Red Sea cargo ships in overnight statements as the reasoning behind military action.

The Treasury has modelled scenarios suggesting that disruption in the Red Sea could further shrink the UK economy, risking a recession.

The main fear in the Treasury's analyses is of a rise of at least $10 per barrel in the international price of crude oil and a 25% increase in the price of natural gas.

Rises such as these have not actually materialised, so far, mainly because of the actions of Saudi Arabia - the major oil producing nation - in soothing global energy markets with price cuts.

The US and UK will hope that their overnight strikes on Iran-backed Houthi rebels will help reverse widespread delays and disruption to Red Sea trading routes, by re-establishing safe passage through the Bab-al-Mandeb Strait into the Suez Canal.

But, on the other hand, there is now also a clear pathway of escalation to a wider Middle East conflict. » | Faisal Islam, Economics editor | Friday, January 12, 2024

Houthi Attacks Mark the Beginning of Conflict over the Red Sea and the Gulf

Jan 12, 2024 | “It's very clear that they are part of a much wider strategy from Iran to sow chaos in the near abroad.” Houthi attacks mark the “beginning of a protracted conflict over the Red Sea and the Gulf”, says Politico’s correspondent Gabriel Gavin.

Secret Deals Ending Britain's Control in Gulf Revealed

Sheikh Saqr of Sharjah was removed from power in a British-sponsored coup
BBC: Secret dealings which brought to an end Britain's empire in the Middle East are revealed in a joint BBC News Arabic and Persian documentary. The film Secrets & Deals: How Britain Left the Gulf contains details of how it left Iran in control of contested islands, as well as eyewitness accounts of a British-organised coup.

The winter of 1967-1968 was a time of crisis for the British economy. Many Arab leaders were convinced Britain had secretly helped Israel to victory over its Arab neighbours in the Six Day War of June 1967. Israel had captured East Jerusalem, the West Bank, Gaza, the Sinai Peninsula, and the Golan Heights.

In retaliation, the oil-rich Gulf states began selling off their holdings of the British currency.

The pound crashed. Desperate to save money, Harold Wilson's Labour government decided it was time to terminate Britain's imperial defence commitments in the Middle East.

Britain never officially had colonies in the Gulf, but it had been the pre-eminent foreign power there since the 18th Century.

The Arab emirates of Bahrain, Qatar and the Trucial States (Abu Dhabi, Dubai, and their smaller neighbours) had signed treaties of protection with Britain.

This meant Britain controlled their defence and foreign policies, while local leaders mostly oversaw local affairs. » | Ahisha Ghafoor & Paul Mitchell, BBC News Arabic & BBC News Persian | Tuesday, August 30, 2022