LUkraine, Gaza… Geopolitics has regained its rights and is once again dictating its law to the economy. After the conflict at the gates of the European Union which disrupts supply chains and energy flows, the war between Israel and Hamas in turn threatens to slow down global growth already anemic by the slowdown in activity in China, post-Covid inflation and rising interest rates. If it extends beyond Gaza – to Iran in the worst-case scenario -, and the world would have to manage a major oil crisis, even if it is less dependent on black gold than during the shocks of the 1970s.
There is no doubt that by carrying out its deadly October 7 attack against Israeli civilians, Hamas was seeking a violent response from the Jewish state. In return, it was to awaken Arab public opinion, from Tunis to Baghdad, outraged by the bombings of Gaza and the abandonment of the Palestinian cause by more and more countries to normalize their relations with Israel. And lead to a cascade of economic disruptions which will not displease the Islamist movement. Economic players listened with attention mixed with concern to the speech given in Beirut, Friday, November 3, by Hassan Nasrallah, the leader of Lebanese Hezbollah armed by Tehran and ally of Hamas.
There was nothing reassuring in this hour and a half sermon, although Nasrallah did not actually declare war on“Zionist state” and to Westerners. Justice of the peace (among others) of geopolitical tensions, the oil markets have remained calm: the price of a barrel fluctuates below 90 dollars (around 84 euros) since October 7. Only gas was booming in Europe (+35%), notably due to the position of Qatar, close to Hamas and the world’s leading exporter of liquefied natural gas. The explosion of the Middle Eastern powder keg is not the most likely scenario.
The business climate is deteriorating
In its report “Commodity Markets Outlook” subtitled “In the shadow of geopolitical risks”published Monday October 30, the World Bank retains a “reference scenario” reassuring for 2024, with a barrel at 81 dollars due to the economic slowdown. Without, however, excluding a military escalation involving Iran and leading to the blockage of the Strait of Hormuz, the bottleneck through which 20% of the world’s oil passes. The market would then be deprived of 8 million barrels per day (out of 102 million), which would bring the price of a barrel to 157 dollars, almost double the current price. At the worst time, according to the chief economist of the Washington institution, Indermit Gill. He recalls that “The ongoing conflict comes after the biggest shock to commodity markets since the 1970s war between Russia and Ukraine”of which “the effects still persist”.
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