Energy Market Risks of Israel-Hamas War Are Growing

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The Israel-Hamas war hits a global economy in flux, Karen Young writes in a guest commentary.

About the author: Karen E. Young is a senior research scholar at Columbia University’s Center on Global Energy Policy.

All this amounts to an environment that discourages cooperation, encourages domestic repression, stresses the limits of international financial institutions, and is easily spooked by disinformation and active threats. It is indeed a dangerous moment. Oil market management has also weighed heavily. Saudi Arabia coordinates between Russia and others through OPEC+, an expansion of the original OPEC group. But Iran and Russia operate a shadow export market, while Saudi Arabia has tried to control OPEC+ output by shouldering cuts mostly to its own production. It is an era of constant contingency planning.

For the Gulf Arab states, there won’t be balancing between Israel and Iran, but only highly individualized contingency planning and recalibration. Bilateralism, and a willingness to engage in disparate public and private positions will likely become more the norm in foreign policy choices from Saudi Arabia, as well as its neighbors in the Gulf Cooperation Council.

 

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