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Is a new oil crisis threatening?

2023-10-13 09:21:47, Ekonomi CNA

Known mechanisms are activated in the world stock markets in case of a new crisis. Stock prices fall, looking for safer investment alternatives, such as bonds or gold. The same thing is happening now, after the Palestinian Hamas attack on Israel. First of all, the value of the shares of Israeli companies, such as the chip manufacturer Tower Semiconductor, or the values ??of companies that are quite active in the Middle East region, is "melting" on the London stock exchange and the US markets.

Is a new oil crisis threatening?

The losses, recorded by the DAX (the most important German stock index), are also the result of a major attack by the Islamist militant Hamas. However, analyst Chris-Oliver Schickentanz from Capitell Vermögensmanagement believes that the direct economic consequences will be limited: "The trade links are indeed there, but when you look at their share on the balance sheet, it is small," says Schickentanz. For large companies, this means that there will be no immediate losses."

Revenge against Iran?

Germany is undoubtedly one of Israel's most important trading partners. On the other hand, when it comes to Germany's most important trading partners in the world, Israel is only in 45th place. Indirectly, the economic consequences are much more dramatic, as the price of oil rose significantly on Monday (9.10.2023). Expensive crude oil means that production and transportation costs are rising, and this was immediately reflected in the stock markets - the share prices of airline companies fell, but not only their shares.

Is a new oil crisis threatening?

"The oil market is reacting, because of course this conflict is happening in a region where important oil-producing countries are located," explains Moritz Krämer, oil market expert at LBBW (Landesbank Baden-Württemberg). "The risk, which is currently being discussed for many traders, is whether Israel may decide to retaliate directly against Iran, given that the country is believed to be behind the Hamas attacks."

In this case, this conflict would spread throughout the Near and Middle East region. Naval blockades can impede trade through the Strait of Hormuz, which is one of the world's most important oil transport arteries. Other trade blockades are also possible, aimed at weakening the trade power of Israel's neighboring countries. This is precisely one of the reasons why the value of the government bonds of Jordan or Egypt fell sharply at the beginning of this week.

Dependence on OPEC oil?

Many traders probably remembered what happened 50 years ago, when OPEC turned off the oil tap, thus provoking the global oil crisis. Even today, such an embargo is conceivable, but Moritz Krämer believes that it is not a possible scenario in this situation:

"Overall, this move would hit oil-exporting countries more than their customers, and the embargo would only affect importing countries to increase their efforts to reduce oil dependence."

Moreover, today the world is much less dependent on OPEC oil than it was half a century ago. Meanwhile, strong competitors of OPEC members are also other countries - countries such as Norway, Great Britain or the USA, countries that today have sufficient resources in terms of oil.

German firms benefit from aid to the Palestinians

What remains a fact is that the Palestinian territories are highly dependent on foreign remittances. The EU, including Germany, has meanwhile suspended the delivery of financial aid (with the exception of humanitarian aid), a move that financial strategist Chris-Oliver Schickentanz views critically. He notes that this aid should be seen from two perspectives: "On the one hand, the money also goes to terrorists". But on the other hand, there is the Palestinian civilian population in need, people who absolutely need this aid.

According to its own statements, the EU has so far been the world's largest donor to the Palestinian autonomous territories. In the Palestinian territories, European financial aid was mainly used to finance infrastructure projects, in which German companies also worked - companies that, therefore, made money on those projects. Criticism has long been heard that the money from the donations was also used to provide financial assistance to the families of those Palestinians who were killed by the Israelis./ DW