Middle East Conflict: Oil/Commodity Prices

conflict

Conflict has broken out depressingly yet again in the Israel/Palestine region. The region has been in constant turmoil since 1947 and events have escalated again significantly since the start of October with over 10,000 civilians killed mainly in Gaza. The current conflict shows no immediate end in sight as Israeli troops have now started their ground invasion in northern Gaza and Israeli PM Benjamin Netanyahu has clearly stated a ceasefire will not happen any time soon. The world hopes we see an end to the conflict soon and let the humanitarian disaster stop. In an economic sense the conflict creates a great deal of uncertainty with the potential to spread to surrounding countries.

As we saw with the start of the Ukraine war in 2022 a global conflict such as this can potentially lead to a sharp rise in commodity prices. Oil prices are the most immediate danger to start rising as the Middle East is a key global supplier and if you can be certain of one thing over the years it is that oil and commodity prices go hand in hand. We’ll have to see how this conflict develops but western powers such as the US, EU & UK have committed their unequivocal backing to Israel with huge amounts of weapons being sent. If regional anti-Western powers such as Iran get involved in the conflict, we could see a sharp escalation. 

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