Energy

Oil Could Explode to $100 or Higher If Hamas-Israel War Escalates

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Tensions in the Middle East have been present since Israel became a nation-state in 1948. So, the recent Hamas attack on Israel may be the flashpoint for a much larger war. From the Arab-Israeli War in 1948 to the Six-Day War in 1967 and the Lebanon War in 1982, the probability for conflict in the region is always present.

This time may be different. And it could shape the future of the Middle East for decades to come. The savage and barbaric actions by Hamas against Israeli citizens could spark a backlash like we have never seen.

The death toll is reportedly already past 1,200 and climbing, and Israeli Prime Minister Netanyahu says the conflict could last for months. So, this could be another hot war that most Western nations would like to avoid.

Is Iran Backing Hamas?

Iran allegedly has been backing and aiding Hamas with weapons, money and strategy. If that turns out to be true, it is not out of the question that Israel could unleash an attack on the country, targeting nuclear capabilities and oil production.

Should that indeed happen, it is a solid bet that Iran will retaliate and up the ante with more support for Hamas. That could increase the attacks on Israeli towns and occupied areas.

Iran’s possible involvement will be another reason for tensions to escalate with the United States. Some politicians warned the $6 billion in frozen funds returned to Iran for the release of five American detainees could be used to continue sponsoring terrorism around the region. (See which 25 cultural treasures were destroyed by war.)

Strait of Hormuz

If the conflict spreads to other oil-producing regions in the Middle East, production could come to a standstill. Plus, any direct attack on Iran could result in the country blocking oil shipments through the Strait of Hormuz.

The Strait of Hormuz is a major shipping lane. In fact, it carries about 30% of the world’s oil to various markets around the globe. Not only could Iran block movement in the strait, but it could launch attacks on shipping vessels as well.

The strait has been a reliable source of tensions in the region for decades. Every time there is a flashpoint like the current war between Hamas and Israel, the threat of a blockade or an actual blockade comes into play.

A recent rise in the U.S.-Iran tensions has also had an impact on commercial shipping. An intentional or inadvertent incident at sea could quickly escalate into a direct military confrontation, and risk shipping through the critical energy chokepoint.

World War III

While most feel that the likelihood of the conflict expanding in nearby regions and farther around the world is unlikely, the atrocities reportedly committed by Hamas may be an issue that pushes Israel to the brink. Hitting that point of no return could push it to invade Gaza. That could cause a big escalation in the fighting.

Most pundits feel there is little chance the fight between Hamas and Israel could escalate to something that causes other countries around the world to get involved. This is especially so given the number of assets deployed and utilized in the Ukraine-Russia war.

Noted though that World War II started out with fascist dictators in Germany and Italy invading and fighting in other European countries. Moreover, the war in the Pacific was initially a fight between China and Japan. Once those went extreme, the Western Allies became involved.

Bottom Line for Hamas and Israel

Hamas wants an independent Palestinian state. According to its 2017 manifesto, the state would at the very least include the land Palestinians held in 1967. Israeli governments have long said that is out of the question. Hamas also wants greater political power, both in Palestine and internationally.

From the Israeli viewpoint, the holocaust during World War II set a precedent that will never change. The deaths of 6 million Jewish people will never be forgotten. In addition, Israel has massive support around the world, and the Western powers would likely align with the Israelis should tensions and fighting escalate broadly. At least for now, it is a case of wait and see.

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