In 2009, Iranians went to an election pitting Mahmoud Ahmadinejad and the moderate Mir Hosein Mousavi.
Ahmedinejad was announced the winner which led to massive protests in Tehran and other cities in what came to be known as Green Movement. The protests were later suppressed by the government, which killed tens of protesters.
On Thursday, protests started to emerge in Tehran and other towns in the country. The demonstrators are protesting increasing desperation, poverty, and a negative status quo. Remember, a few years ago, the Obama administration with a group of world superpowers entered into a deal with Iran. The deal opened the Iranian oil to international markets and released billions of dollars which were held during the sanctions.
Many Iranians were hopeful. They expected to see real change like employment and good healthcare. Instead, the situation worsened with unemployment rate growing to more than 40%. Most Iranians have no access to good healthcare.
In addition, the country continued its support for capital-intensive activities like its ballistic missile development and funding terror groups like Hezbollah.
The current protests are different from those that happened almost 9 years ago. First, the West is vocal with Trump airing his support for protesters. Other Western leaders like German Chancellor Angela Merkel and UK’s Theresa May have also aired their support. Second, and most importantly, Iranians have adopted to the use of social media platforms like Telegram hat hides their identity to help them mobilize better.
The implications for these actions are dire. In the past, such protests have led to more protests in other countries. For example, in 2010, the uprising in Tunisia led to more uprisings in other countries like Libya, Syria, and Egypt.
Potentially, we could see more uprisings in the Middle East. Some have argued that the next frontier for protests could be Saudi Arabia where the economy has depressed. The crown prince has gone on a purge seeking to raise more than $100 billion from senior government officials and princes.
However, there are concerns about his intentions especially after reports emerged that he paid more than $450 million for a painting. It was also revealed that he owns the most expensive house in France (and in the world according to certain sources) that he rarely visits.
Already, the increasing tensions in the region have seen impacts in the gold market. Gold has seen its price surge to reach a 3-month high. This is partly because of a weaker dollar and partly because of the increasing tensions.
However, the major implications will be in the crude oil market. Iran and the Middle East are the top oil producers in the world. As such, increased tensions could lead to high oil price as a result of supply chain cuts. The supply chain cuts are associated with disrupted production and transportation. In addition, new sanctions from the U.S and other countries could reduce the supply level of crude oil.
Already, the price of crude oil is at a three year high and is expected to go up as demand increases and supply reduces.
Oil traders should pay a close attention to the current crises in the Middle East. They should also focus on the oil producers’ currencies like Canadian and Australian dollar.