Rabobank with the note.
Summary
- 2023 now adds a Hamas-instigated Middle East war to the list of global conflicts underway.
- While nothing can be predicted, we share likely geopolitical scenarios that could emerge; as one includes far greater global bifurcation, we should pray for the best in the Holy Land.
- For energy, a contained conflict will see the recent price spike reversed. However, instability closing the Suez Canal would see oil near $100 and European TTF at €80, and if the Straits of Hormuz are hit, oil at over $150 is achievable.
- For food and agri, an Israel-Gaza war is manageable. However, if it spreads to the broader Middle East, developments on fertilizer supply and grains, meat, and dairy demand could be notable. Of course, the energy issue transcends all of these for farmers, as for everyone.
The global insecurity order
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The global security order is crumbling. In 2021, Afghanistan collapsed as a US client state, returning the Taliban to power. In February 2022, war began in Ukraine. 2023 had already seen four anti-Western African coups; civil wars in South Sudan and Ethiopia; a map-changing victory for Azerbaijan over Armenia in Nagorno-Karabakh; fears of more map-changing war in the Balkans; carpet-bombing of civilians in one pocket of Syria, and Turkish actions against Kurdish forces backed by the US in another; and rising tensions in the South China Sea between the Philippines, again backed by the US, and China. Now the year sees a Middle East war too.
