Israel-Hamas War Poses No Danger To Oil Output, Says Alastair Newton
Newton said hostilities will hopefully end and a ceasefire between the two warring sides will most likely be brokered by Egypt.
A return to status quo in the Israel-Hamas war is the "least worst case scenario", which will not be accepted by either parties, according to Alastair Newton.
Hostilities will hopefully end and a ceasefire between the two warring sides will most likely be brokered by Egypt, Newton, chief executive officer of Alavan Business Advisory Ltd., told BQ Prime.
"Return to a status quo ante is not an ideal scenario and could be considered as a least bad case given what is going on currently," he said.
More than 1,008 Israelis have been killed and over 3,418 others have been injured since Saturday, when Hamas launched rockets and sent militants into southern Israel.
According to him, the conflict will not threaten the Abraham Accords—a landmark normalisation of ties between Israel and the United Arab Emirates, Morocco, Bahrain, and Sudan—though the four Arab countries would like to see the crisis settle soon and hope to renew international efforts for a two-state solution.
However, a two-state solution will not be pursued under the current far-right government led by Prime Minister Benjamin Netanyahu, he said.
"Israel remains ambitious of spreading its footprints in the West Bank further, an internationally recognised occupied territory. Hamas and Islamic Jihad will not give up fight in the long term... There are no easy solutions here."
According to Newton, the Palestinian cause enjoys sympathy among local Arabs. However, given the intensity of the conflict, an Abraham Accord-style arrangement between Israel and Saudi Arabia is now unlikely.
"Even for Saudi Arabia's autocratic leadership, it (normalisation of ties with Israel) would be a step too far relative to popular sentiment," he said.
No Present Danger To Oil Output
"There is no clear and present danger to oil output anywhere in the Middle East right now. If Iran gets involved that would change, but it is unlikely," Newton said.
The U.S. may tighten implementation of sanctions on Iran but the country is very good at evading them and continues its exports to nations like China, he said.
Highlighting the bond market sell-off, Newton said markets are comfortable with the current price of Brent crude, which is hovering below $90 a barrel.
Iran Angle In The Conflict
Newton said a ground operation by the Israelis in Gaza is a strong possibility but what happens after the incursion and suppression of Hamas remains to be seen.
Israel hasn’t announced that it will send troops into Gaza, but Netanyahu has promised that, “What we will do to our enemies in the coming days will reverberate with them for generations.”
Newton is concerned over Israel's arch rival Iran getting into the conflict through its proxies. "Everybody seems to be interested in playing down the role of Iran in backing Hamas. So, no widespread conflict as far as we can tell."
IMEC Will Not Be Impacted
The India-Middle East-Europe Corridor announced on the sidelines of G20 in September is a long-term project and will not be impacted by the current conflict.
"This is a relatively short-term flare-up in the conflict. India and the EU with U.S. backing are committed to this project. That corridor is particularly a counter to China's Belt and Road Initiative," he said.
The corridor links India to Europe through a web of rail and sea link that passes through the Arabian Sea, UAE, Saudi Arabia, Jordan, Israel, and the Mediterranean Sea.
