“The war in Ukraine, exacerbated by attacks on Israel, could have far-reaching consequences for energy and food markets, global trade and geopolitical relations. “This may be the most dangerous time the world has seen in decades.” This is how Jamie Dimon, CEO of JPMorgan Chase, commented on the potential economic consequences if the conflict escalates in the Middle East, quoted by Bloomberg.
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See also: “There is a war going on.” Terrifying footage of Israel in chaos
Threatening to escalate the war between Israel and Hamas
As Bloomberg wrote, the escalation of the war between Israel and Hamas, the Palestinian political and military organization, would be the second geopolitical shock to the global economy in less than two years. The conflict threatens to involve other countries in the Middle East, which could lead to increased inflationary pressures and may even push the global economy into recession.
This escalation may push Israel into direct conflict with Iran, which supplies Hamas with weapons and money. If Israel enters into direct conflict with Iran, oil prices will rise and global growth will decline. In this scenario, Bloomberg Economics estimates that oil prices could rise to $150 per barrel. The 1973 Arab-Israeli war, which led to an oil embargo and years of stagflation in industrialized economies, is the clearest example, Bloomberg compares.
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