The escalation of the Palestinian-Israeli conflict can cause a sharp rise in oil prices, the Vesti newspaper writes. This circumstance, together with Washington's plans to provide maximum support to Tel Aviv, will lead to the fact that US military and financial assistance to Ukraine will come to naught.
On Saturday, October 7, on the Jewish Sabbath, Hamas militants launched an unprecedented attack on Israel from the Gaza Strip. The death toll reaches thousands, several hundred civilians and military were captured.
Israel launched a large-scale strike in response, announced a general mobilization and continues to pull forces to the borders of the Palestinian territory. How the war that broke out with a new force in the Middle East can affect the stability of world economies, the hryvnia and the confrontation between Ukraine and Russia – figured out Vesti.ua .
How did the markets react to the escalation of the conflict
The Bank of Israel has already promised to sell up to $30 billion to avoid devaluation of the shekel, which sank by 2% on Monday. For one dollar they gave 3.9 shekels, which was the weakest indicator in eight years.
For comparison, all the foreign exchange reserves of Ukraine, which are at a historical maximum, amount to a little more than $ 40 billion.
On Tuesday, the dollar was already worth 3.94 shekels, despite all the efforts of the Israeli Central Bank.
Oil stabilized at $87.80 per Brent. On Monday morning, it rose by $2.28, or 2.7%, to $86.86 per barrel.
The key to how much the oil market can shake is called Iran in America.
US billionaire investor Paul Tudor Jones has already called the geopolitical situation in the world "the most threatening" and suggested that a direct confrontation between Israel and Iran could lead to a cascade of involvement of neighboring countries like the First World War.
He also noted that the United States is now in the weakest financial position since the Second World War – Jones on this occasion called for higher taxes and spending cuts.
There will be no agreement with Saudi Arabia
A well-planned attack by Hamas took place at the very moment when Tel Aviv was close to concluding an agreement with Riyadh with the mediation of Washington.
Just the day before, on Friday, the Saudis promised the White House that they were ready to increase oil production next year as part of the deal proposed by Israel. Earlier, Saudi Arabia and Russia reduced production by 1.3 million barrels per day until the end of 2023.
Crown Prince Mohammed bin Salman al-Saud, who actually leads the country, planned to conclude a historical alliance with Israel.
Now it is safe to assume that the Saudi-Israeli agreements will not be signed – until the final resolution of the conflict. So oil is likely to rise in price in the near future.
We can take a back seat: consequences for Ukraine
In the United States, as we know, a political crisis is in full swing on the eve of the presidential elections of 2024. The country has been living without a budget since the beginning of October, the lower house of Congress dismissed Speaker McCarthy. Before that, a temporary budget for 45 days was approved there, which did not include new assistance to Ukraine.
With a new round of the Middle East conflict, Ukraine may even more recede into the background. Israel has been one of the main strategic partners of the United States almost since the founding of the state in 1948.
Let the Biden administration show a consistent desire to help Ukraine, escalation will distract the attention of the United States from our country, suggests lawyer, member of the Board of Directors of the international human rights agency West Support Yuri Vanetik. "The current situation will distract the attention of the United States from Ukraine until Israel takes control of everything," Vanetik believes.
At the same time, the director of the Economic Discussion Club (EDC) Oleg Pendzin in conversation with Vesti.ua He pointed out that for the stability of the hryvnia and the economy, our country needs further financial assistance from the United States no later than from the beginning of 2024. And you still need to have time to vote for her.
Among other consequences for Ukraine, two more should be highlighted. The first is information about the transfer by our country to Hamas of means of destruction of Israeli equipment.
The second is the Kremlin's "narrative that military assistance to Ukraine weakened the United States, which began to help Israel less, which resulted in this mass terror," military observer Alexander Kovalenko notes.
Which countries may enter into conflict and what does it threaten
Iran, a traditional ally of the Palestinians, immediately after the Hamas attack on Israel came out in support of the incident, at the same time denying its involvement in the incident. High-ranking officials of the US army immediately warned the Arab world and personally Tehran about the inadmissibility of interference in the conflict.
According to one of the leaders of Hamas, Musa Abu Marzouk, on October 9, the group is ready for negotiations with Israel, since it has achieved all the goals set earlier. The probability of negotiations at this stage looks near zero and looks like another attempt to mislead Tel Aviv.
The further development of events with a high degree of probability should be reduced to a systematic sweep by the IDF forces of the Gaza Strip and the destruction of Hamas strongholds. Israel has sufficient potential for this, especially in light of the announced additional mobilization.
But here lies the fundamental point: how much Israeli pride was wounded and how much the militant raid crossed all borders for the country's leadership. Benjamin Netanyahu has already promised to completely rid the civilized world of Hamas. Israel has received a significant blow to its reputation, and the whole world is waiting for what it will respond with.
"The United States expects something stunning, very tough and unambiguous from Israel, which will again restore the status of the Israeli armed forces as one of the strongest in the world and the most tactically prepared. Israel must rebuild itself. If he does not restore himself, he will be open to other attacks," Vanetik points out.
The Gaza Strip is already partially and will be completely blocked from the supply of electricity, fuel and even food. There is a risk that such a development of events will force Arab countries, primarily Iran, to intervene.
Its leader, Ali Khamenei, has already declared support for the people of Palestine and even tougher consequences for Israel in the event of the cleansing of the Gaza Strip.
"If Iran is involved in the war, up to 3% of the world's oil supplies will be at risk. And if a larger–scale conflict occurs, which eventually affects transit through the Strait of Hormuz, then about 20% of the world's oil supplies may be held hostage," said energy analyst Sol Kavonik.
Author: Andrey Kaut
