Yesterday, Israel launched a precision airstrike against Hamas leader
Ahmed Al-Jaabari. The strike killed 15 people including civilians and some
children.
It was just one of 200 rockets launched since the start of an Israeli
operation targeting military figures and installations in Gaza. Palestine
retaliated with rockets of their own, killing at least three with one blast
in the Negev region.
This is the worst violence between the two states in four years.
And it's the first since Egypt's revolution toppled our only Arab ally in
the region.
The peace treaty between Egypt and Israel remained intact when former
president Mubarak left the position, but new president Mohamed Mursi of the
Muslim Brotherhood might take a harder stance.
He's already called for an emergency meeting of the Arab League, and
called the attack "a crime that requires a quick Arab and international
reaction to stop the massacres."
And other Arab nations and sympathizers could be circling the wagons.
From Reuters:
Israel's sworn enemy Iran, which supports and arms Hamas, condemned
the Israeli offensive as "organized terrorism". Lebanon's
Iranian-backed Shi'ite militia Hezbollah, which has its own rockets aimed at
the Jewish state, denounced strikes on Gaza as "criminal
aggression", but held its fire.
The escalation is scary, first and foremost because Israel doesn't
bluff... especially with the hawkish Netanyahu at the helm.
At least for the next couple of months.
Elections are scheduled in January, and Netanyahu's offensive -; though an
escalation from ongoing violence -; is seen as "central to the election
campaign," according to Yoram Meital, chairman of Ben Gurion
University's
Herzog Center for Middle East Studies in Beersheba.
Even Netanyahu's political adversaries are backing the offensive.
Hamas released a statement saying Israel has opened the gates of hell by
killing Al-Jaabari.
Israel's army warned -; in a Twitter post, of all things -; "no Hamas
operatives, whether low-level or senior leaders, show their faces above
ground in the days ahead."
Yes, folks... The sky may be falling.
And oil may be rising.
Andrew Su, CEO of Compass Global Markets in Sydney, told CNBC's Squawk
Box today, "There's a possibility of a $5 spike in premium over the
next week if there's escalation... if there's ground movement, if the Israeli
army moves its infantry into the Gaza Strip."
And that's a distinct possibility.
From Bloomberg:
Defense Minister Ehud Barak said Israel may carry out a ground
operation in Gaza if needed. It's last one, a three-week offensive starting
in December 2008, killed more than 1,100 Palestinians and 12 Israelis.
Tanks were seen today heading southward on Israeli highways toward the
coastal territory. "We are in the midst of a conflict that is far from
simple, and it is not certain that it will be short," Barak said in an
e-mailed statement from his office.
This was in the midst of plummeting oil prices, the start of the worst
financial crisis since the Great Depression. Oil fell off a
cliff, from a peak of $147 in mid-2008 to well below $40 by the end of the
year.
View larger chart
The government was pumping stimulus money into
the economy as fast as it could, and in the heart of the fray, Israel marched
into Gaza.
The move helped $40 oil turn quickly into $50.
A $5 move is definitely not out of the question.
But beyond oil, things get scarier.
If other Arab states get militarily involved, what will the U.S. do? And
would Iran be content to sit idly by if we put our own troops on the ground
to stand with Israel?
What will our Congress decide to do about the fiscal cliff and the massive
defense budget cuts coming down the pipe if we have to consider backing our
Israeli friends with actual military might?
My two cents: Israel has always defended itself -; even against a
well-organized Egypt. During the oil-shock wars of the 1960s and 1970s we
supplied Israel with weapons and intelligence and symbolic support. But
Israel did the heavy lifting.
It would take a concerted effort that included a number of Arab states,
and perhaps even Iran, for us to consider force.
Let's not forget that Syria's entrenched in its own civil war, and most
likely won't attack through the Golan Heights. Indeed, Syrian rebels are said
to hold the villages in that area, not the Syrian army.
So is the sky falling? Not yet, but the tensions are heating up...
Oil investors should keep an eye on the ground game, but don't pull the
trigger just yet.
Happy Investing,
Sara
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