By Michael Every, Joe DeLaura and Stefan Vogel of Rabobank (full note available to pro subs)
2023 now adds a Hamas-instigated Middle East war to the list of global conflicts underway.
While nothing can be predicted, we share likely geopolitical scenarios that could emerge; as one includes far greater global bifurcation, we should pray for the best in the Holy Land.
For energy, a contained conflict will see the recent price spike reversed. However, instability closing the Suez Canal would see oil near $100 and European TTF at €80, and if the Straits of Hormuz are hit, oil at over $150 is achievable.
For food and agri, an Israel-Gaza war is manageable. However, if it spreads to the broader Middle East, developments on fertilizer supply and grains, meat, and dairy demand could be notable. Of course, the energy issue transcends all of these for farmers, as for everyone.