'Israeli-Palestine war may increase global fuel prices'

Lebogang Mosikare | Monday November 6, 2023 06:00

On October 7, the Palestine group Hamas launched a brutal terror attack from the Gaza Strip killing hundreds and wounding many and also prompted Israel to retaliate by airstrikes on the Palestinian territory. Israel has now launched a ground force offensive in Gaza in the hunt for Hamas militants. Hamas and Israel have a history of conflict. According to international news reports, Hamas has said it was motivated to launch the attack essentially as a culmination of long-building anger over Israeli policy, including recent outbreaks of violence at the Al-Aqsa Mosque in Jerusalem but more generally over the treatment of Palestinians and the expansion of Israeli settlements.

Back home, Phatshwane’s fear is that the Israel and Palestine conflict may escalate into a full scale regional war which will have ripple effects in the fuel industry. “The Israel-Palestine conflict has the potential to increase the global prices of fuel. This situation will not only affect the corporate world but ordinary citizens as well across the world,” a worried Phatshwane said recently when giving welcome remarks at the Botswana Chamber of Mines (BCM) Inter-Mines First Aid Games. He added that fuel producing countries in the Middle East produce about 30% of the world’s fuel hence the need for an immediate and sustained humanitarian truce leading to a cessation of hostilities between Israel and Palestine.

According to energy analysts, violence could bring tightened U.S. sanctions against Iran, derail a possible Israeli-Saudi thaw and expand conflict across the Middle East — any of which could threaten to send fuel prices soaring. The analysts added: “The new war in the Middle East is throwing yet another wrench into the world’s energy markets — hitting a struggling global economy at a politically perilous moment for leaders in the United States and Europe.” The surprise attack in Israel by the Palestinian group Hamas brought new calls from lawmakers for tightened U.S. sanctions against Iran and threatened to derail efforts to normalise relations between Israel and Saudi Arabia. Either outcome could send already-high oil prices soaring.

International news reports say that the prices began climbing as soon as markets resumed trading Sunday night, with the global benchmark up five percent to nearly $89 a barrel just after 9:30 p.m. EDT. The price settled below $88 by 9 a.m. Monday. Global petroleum supplies have already been roiled by Russia’s war on Ukraine and the resulting Western sanctions against Moscow’s oil exports. Those prices had slumped slightly last week, but many analysts are bracing for a spike in the coming days or weeks. Prices are likely to rise “not so much because the conflict impacts any oil supply at the moment, but on the fear that the conflict could draw in other players such as Iran who has been backing Hamas,” said Andy Lipow, head of the energy consulting firm Lipow Oil Associates. Iran was the world’s eighth largest oil producer last year and exported about two million barrels per day in August, despite sanctions aimed at pressuring Tehran to abandon its nuclear ambitions.