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The possibility of the conflict between Hamas and Israel expanding into a larger confrontation involving Lebanon, Syria and Iran, although a big IF, it is a scenario that can hardly be dismissed and it is solidifying as a baseline consideration.

We outline the reasons why we think Israel-Hamas war is a perilous global shock in what follows!

#1 Reason

The ongoing Israel-Hamas conflict is not happening in a vacuum, but rather against the backdrop of escalating geopolitical tensions between the Western powers and the China-Russia bloc. What initially started as a trade war, followed by a tech war, is now gradually transitioning into a more direct manifestation of a new Cold War.

The growing likelihood of an expanded Israel-Hamas conflict is increasingly attributed to a convergence of interests between influential global players, namely China and Russia. Amidst his struggles in Ukraine, Vladimir Putin appears to perceive an advantageous opportunity in the escalation of the Hamas-Israeli tension, potentially leading to a broader confrontation between Israel and Iran. Such a scenario would inevitably draw the United States, Israel’s staunchest supporter, into a direct and contentious standoff with Iran.

Similarly, Xi Jinping sees potential benefits in a distracted US, steering away from its predominant focus on China. This confluence of motivations highlights the pivotal role played by Hamas’s acts of terrorism, inadvertently elevating Iran to the status of the paramount wildcard in an increasingly fragmented and volatile global landscape.

#2 Reason

In an unprecedented scale of violence, Hamas’ recent assault on Israel has left a devastating trail, marking it as the deadliest terrorist strike by population count in history.

Hamas Terror Attack October 2024

Shockingly, the casualty toll surpasses that of the infamous September 11 attacks in the United States by a staggering thirteenfold, underlining the sheer magnitude of this calamity.

Contemplating the meticulous planning and extensive groundwork behind an attack of such magnitude, the pressing question arises: what impelled Hamas to orchestrate a strike that could potentially invite severe repercussions, endangering not just their own survival but also imperiling the existence of the Gaza Strip itself? Is there a clandestine reliance on significant external forces that emboldened this audacious move?

#3 Reason

Recent indications suggest that China has been significantly ramping up its crude reserves, potentially in foresight of escalating tensions in the Middle East. While this remains speculative without concrete evidence, the sheer scale of China’s crude stockpile expansion raises doubts as to whether the ongoing Israel-Hamas conflict alone could prompt such a substantial move, given its limited impact on crude prices. It appears that there might be an underlying development brewing, concealed beneath the surface. Notably, data suggests that China has added a significant 810,000 barrels per day (bpd) to its reserves during the first eight months of this year, totaling approximately 197 million barrels.

#China crude oil inventories rising

Such buildup implies that China could potentially decrease imports by approximately 1.61 million bpd over the remaining four months of 2023 while maintaining its stockpiles at the same level as at the close of 2022. Concurrently, amidst these developments, OPEC data highlights a significant supply shortfall, adding to the complexities of the global energy landscape.Crude Shortfall #israel #hamas
Good reads on the subject :
Stephen Roach here
Adam Tooze here.
#inflectionpoint we believe the Israel-Hamas War is a global shock and the risks of escalating tensions are currently  under-priced by the financial markets.
Commodities and USD probably remain the safest bests!
@giorgiovintani @tombaldacci Charts by #zerohedge #bloomberg #refinitiveikon
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