Han said, “The situation between Japan and Palestine is worsening… “Concerns about oil market and financial shocks next year”

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Presenting three scenarios for the aftermath of the Israeli-Palestinian conflict
Limited oil price and financial impact if resolved early
When Iran enters the war, the impact on crude oil and financial markets increases.

The Bank of Korea analyzed that if the conflict between Israel and the Palestinian armed group Hamas worsens, it will have a significant impact on Korea as the international oil price increase increases and global financial conditions worsen.

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The Bank of Korea analyzed the situation and aftermath of the Middle East conflict as follows in the report ‘The Impact of the Israel-Hamas Situation on Our Economy’ published on the 3rd.

According to the report, geopolitical tensions in the Middle East region have increased due to a surprise attack by the Palestinian armed faction Hamas and Israel’s counterattack in response, and uncertainty regarding future developments is very high.

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After the incident, upward pressure on international oil prices increased and volatility in the international financial market also increased. Oil prices surged 4% immediately after the incident and then fluctuated slightly, but then surged by about 6% due to concerns about the start of a ground war.

However, U.S. Treasury yields fell sharply due to heightened geopolitical risks, but appear to be above pre-crisis levels as concerns about a prolonged austerity policy due to rising oil prices are highlighted.

The report predicted that the Middle East crisis would have an impact on the domestic economy through changes in international oil prices and global financial conditions, and presented three scenarios depending on future developments.

First, if the Middle East conflict is contained to a certain level and resolved relatively early, the impact on international oil prices and the global financial market will be limited.

It is expected that if the scale of the conflict expands to include Hezbollah, the increase in international oil prices will increase and global financial conditions will worsen.

Lastly, there were concerns that if the war in the Middle East escalated, including Iran’s participation in the war, the supply of Middle Eastern crude oil could be significantly disrupted and the impact on the global financial market could be greatly expanded.

A Bank of Korea official said, “The impact on the domestic economy will be relatively limited if it is resolved early, but if it worsens, a significant impact will inevitably be felt within next year.”

Israel-Palestine War

Source: Donga

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