The current war between Israel and the Palestinian political and militant group Hamas originated in the murder of over 1,400 of the former’s civilians by the latter on and around 7 October, it has quickly begun to revert into the long-running conflict over the statehood of Israel and Palestine. This brings with it the potential to draw into the war several other Arab states in the region who support Palestine’s right for a fully independent state. It also means that Iran – a Persian, not an Arabic, state, but one which does is committed to erasing the state of Israel – has everything to gain by instigating a widening out of the present war between Israel and Hama the Islamic Republic of Iran, which came into existence in 1979. With the removal of Israel as a state being one of its core objectives, alongside the destruction of all U.S. influence in the Middle East, several highly-placed security sources in both the U.S. and the European Union (E.U.), exclusively spoke to by OilPrice.com last week, do not believe that Hamas would have acted against Israel on 7 October without – at minimum – assurances from Iran that its actions were not opposed in Tehran. “Israel is regarded as an abhorrence by Iran – not just because of its existence as a state, but also because it is seen as the primary tool by which the U.S. seeks to extend its influence across the Islamic world of the Middle East, so [Iran] it has everything to gain by manipulating this war [between Israel and Hamas] into something much bigger,” a senior source in the E.U.’s security complex told
Although there is a flurry of diplomatic activity taking place to avert the Israel-Hamas War widening out, on 16 October Iran’s Foreign Minister, Hossein Amir Abdollahian, warned that its regional network of militias would open “multiple fronts” against Israel if its attacks continued to kill civilians in Gaza. It seems highly likely that the first new front would be a full activation of Hezbollah in Lebanon, to Israel’s direct north; a 100,000-strong very well-equipped fighting force funded and trained by Iran’s Islamic Revolutionary Guards Corps (IRGC) that dwarfs the fighting capabilities of Hamas in all respects. Israel has already stated that its mission is to “annihilate Hamas” and that to do so it will launch ground operations into Palestine for as long as it takes to do so. Additionally, over the weekend, Israel’s Minister of Economy, Nir Barkat, said that if Hezbollah fully joins the war then Israel would “cut off the head of the snake” and launch a military attack against Iran. A third front could also be opened by Iran, using its own IRGC and proxy militant forces stationed in Syria, to Israel’s northeast.
The potential for oil and gas prices to spike is considerable if the conflict does indeed widen out. Reductions in supply from any of the major OPEC suppliers – let alone all of them at once, as might be the case – would be extremely difficult to compensate for, although there are plans in place by the West to attempt to do so. Emergency gas supplies from Qatar appear likely to continue under most circumstances, which would alleviate some short-term price pain in the West, as they did after Russia invaded Ukraine in 2022. Plans are also in place to extend the easing of sanctions on Venezuela seen on 18 October, according to the E.U. source, with the country’s crude production averaging around 770,000 bpd in September. Additionally, the International Energy Agency (IEA) said on 12 October that it is “ready to act” if the Israel-Hamas War escalated to hit oil supplies in the region. As has been seen before in times of dramatic oil price rises, the agency can coordinate the release of emergency oil stocks with each IEA member country. Each is obliged to hold oil stocks equivalent to at least 90 days of net oil imports and to be ready to respond to severe supply disruptions affecting the global oil market. This said, OPEC+ controls