Analysts and economists generally seem to believe to that Hamas’ October 7th horrific attack on Israel will have fairly little impact on world financial and commodity markets despite the devastating human toll. At least 700 Israelis have been killed and many more taken hostage by the terrorist group. In addition, about 300 Gaza residents have died as Israel has pounded the territory in retribution.
This benign view may very well be the outcome — but only if Iran is found not to have a played a key role in the carefully planned operation. Specifically, that Hamas utilized drones and paragliders in the incursion and abducted many Israeli citizens and military personnel strongly suggests a sophisticated military group participated at least in the training for, if not in the execution of, the incursion.
Iran and its militant group, Hezbollah, would be virtually the only logical guesses of which entities could have played such a role. Saudi Arabia seems almost certain not to have participated since it has been negotiating a deal, with the help of the U.S., to normalize relations between itself and Israel over the last few months.
Iran’s state media does little to dispel its potential involvement in Hamas’ action, saying it represented “the spontaneous movement of resistance groups and Palestine’s people in defense of their inalienable rights and their natural reaction to the Zionists’ warmongering and provocative policies.” As noted, this meticulously planned operation was anything but “spontaneous.”
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Clearly, Israel will likely destroy infrastructure and many dwellings in Gaza as it searches for hostages and perpetrators. Of course, Israel must be careful regarding the damage it inflicts in Gaza because of the existence of, and potential negotiations for, release of the hostages. It seems quite possible that hostilities could spread to the West Bank region as well.
A near worst-case scenario would be if Hezbollah were to decide, while Israel is distracted, to open a northern-front war against Israel. Of course, if Israel were to determine to its satisfaction that Iran played a key role in the October 7 attacks, Israel could itself initiate bombing attacks on Iran and Hezbollah.
Should a conflict develop between Iran and Israel, the price of crude oil would likely spike at least over the short run as the output of a major global producer could be curtailed. Iran is currently producing about 3 million barrels of oil per day, equivalent to about 3% of global production.
Information for this briefing was found via the EIA and the sources mentioned. The author has no securities or affiliations related to the organizations discussed. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
