By Alexander Lee 
 

 
Palestinians inspect the damage of destroyed houses after Israeli airstrikes on Gaza City, Tuesday, Oct. 24, 2023. (AP Photo/Abed Khaled)
 
On the morning of the 13th (local time), oil prices surged. West Texas Intermediate (WTI) crude rose 3.46% at one point to $85.47 per barrel, and Brent crude rose 3.51% to trade at $89.02 per barrel. The reason for the jump in oil prices is that the Israel-Hamas war is increasingly becoming a 'strong vs strong' confrontation. Israel has ordered all civilians in the Gaza Strip to evacuate, instructing them to move to the area south of Wadi Gaza. The Israeli military announced, "A large-scale operation will be carried out within the next few days," and "do not return to the Gaza City area until the military allows it." Concerns about human rights abuses in the Palestinian region are growing with the deployment of Israeli ground troops. Hamas claimed that "the evacuation order for residents is a propaganda and psychological warfare," and "Palestinians should not leave their homes." This statement implies that Hamas intends to use civilians as a sort of 'shield' in response to the deployment of Israeli ground troops. The United Nations has appealed for the evacuation order to be withdrawn "so that the tragedy does not escalate into a disaster," but the standoff between the two sides is becoming increasingly serious.
Some corners are cautiously predicting the possibility of escalation. After the deployment of Israeli ground troops, if the sacrifice of Palestinian civilians increases, there is a high possibility that Hezbollah, a Lebanese armed group, will participate in the war. On this day, Hezbollah stated, "When the time comes, we will confront Israel," hinting at the possibility of joining the war.
Nouriel Roubini, a professor at New York University known as 'Dr. Doom,' evaluated that "the market is underestimating the conflict risk in the Middle East too much." In an interview with Bloomberg, he said, "The conflict is still in a restrained state, so the impact on the market is small, but if Israel occupies the Gaza Strip, the situation will worsen." He predicted that "if Iran and Lebanon intervene, the Gulf's oil supply will be cut off, and oil prices will surge." He added that the surge in oil prices could stimulate inflation, and as a result, the Federal Reserve may raise interest rates further or maintain high interest rates, leading to a 'stagflation' where the economy stagnates.
BNY Mellon also expressed a similar opinion. BNY Mellon pointed out that "the risk of inflation rising due to the increase in oil prices and defense spending has increased, but this has not yet been reflected in the price." They predicted, "Considering Israel's budget and GDP, it has the capacity to continue the war for more than 8 weeks." "If the war becomes protracted, the possibility of disruption in oil supply increases, and accordingly, the demand for safe assets such as gold and dollars will increase."
 
Reporter Alexander Lee alexanderlee_24@newsyn.co.kr