An oil tanker is on fire in the sea of Oman on June 13, 2019. Since Israel has made it clear that its aggression extends to Iran, there is real potential for a serious regional and even global war.
| Photo Credit: AP

The recent escalation of tensions in West Asia has led once again to concerns that this will affect global oil prices, given the region’s importance in global petroleum and natural gas supply. Israel’s horrific devastation of Gaza over the past year and its genocide upon the Palestinian people, and even the attacks on Lebanon did not have much impact on oil markets because neither Palestine nor Lebanon are significant oil producers. But Iran is another matter. Since Israel has now made it clear that its attitude of aggression with impunity covers Iran as well, even to the point of trying to force “regime change” along the lines developed in previous West Asian wars by its fervent supporter the US, there is real potential for the outbreak of a serious regional and even global war.

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Remarkably, however, international oil markets have not reacted as much as expected. It is true that global oil prices increased in October, rising by 10 per cent in the week to October 7 to an average of above $80 a barrel, but they fell thereafter, staying at around $77 a barrel into the third week of October.

After more than a decade of relative stability in the 1990s and first part of the 2000s, global oil price volatility increased from around the time of the first Gulf War that the US waged against Iraq in 2003, and went up sharply until mid-2007, only to fall drastically in the second half of the year. The figure shows how global oil prices have fluctuated dramatically since then. It is true that current oil prices are much higher in nominal dollar terms than they were two decades ago, but since 2007 they have fluctuated around a constant trend, with sharp peaks and troughs. Also, these have had relatively little to do with geopolitical events and much more to do with economic processes.

Supply-demand dynamics

Essentially, the nature of the global oil market has changed, in terms of both supply and demand. Oil supply is more diversified, to the point where OPEC+ oil producers (the Organization of Petroleum-Exporting Countries, mostly West Asian states like Saudi Arabia, Kuwait, and UAE along with other associated oil-exporting countries like Russia and Kazakhstan) that dominated the market in the 1970s and 1980s are no longer as significant. The US, which has been the largest oil consumer for a long time, became the world’s largest oil producer in 2022 and now accounts for around 22 per cent of global output. This is slightly more than the two next largest producers—Saudi Arabia and Russia—taken together. Meanwhile, despite its significant known oil reserves, Iran provides only 4 per cent of global production, less than China at 5 per cent.

The US is also among the five largest oil exporters (along with Saudi Arabia, Russia, Canada, and Iraq) and is dominant in natural gas exports. Iran is only the 16th largest oil exporter in volume terms, exporting less than 4 per cent of world oil exports. So even the worst-case scenarios currently being considered, such as an Israeli attack on Iran’s oil refineries or a blockade of the Strait of Hormuz through which most of Iran’s oil flows, would have only limited impact on globally traded oil supplies.

Alternative energy sources

The demand side also matters. In the past decade, China emerged as a voracious importer of oil, surpassing the US in 2017. China’s imports of petroleum and its products increased continuously for two decades, peaking in 2023, and were certainly a factor in the oil price increases since 2016, other than the pandemic-period decline. But such oil imports have slowed down and even declined thus far in 2024, reflecting China’s domestic economic slowdown and rebalancing towards other forms of crude energy use (including coal).

As a result, the International Energy Agency (IEA) estimates that world demand is slowing down and will be significantly less this year than in 2023, even as there will be “robust gains” in oil supply from non-OPEC+ countries, led by the United States, Brazil, Guyana and Canada. Meanwhile, the spare capacity to produce oil in OPEC+ countries is at a historic high, lower only than the exceptional period of the COVID-19 pandemic. Further, despite some drawing down of oil inventories over the past four months, global stocks of crude oil and refined products together are the highest of the past few years. As the IEA report says, “For now, supply keeps flowing, and in the absence of a major disruption, the market is faced with a sizeable surplus in the new year.” (https://www.iea.org/reports/oil-market-report-october-2024)

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Of course, there could still be new shocks coming out of this highly tense and potentially explosive situation, which could dramatically alter these projections that are making global capitalism complacent about likely outcomes. Also, many of the recent spikes in oil prices (just as those in other commodity prices including food) have not resulted from actual supply-demand imbalances, but rather were the result of profiteering by big global corporations in those sectors and financial speculation in energy and commodity markets. These tend to be enabled and then fuelled by media reports rather than real changes in physical markets, and this also could still happen.

But for the moment, the ongoing tragedy and unspeakable horror faced by people in Palestine and Lebanon is not a subject important enough for the markets to take note, because the impact on global energy supplies is still limited.

Jayati Ghosh taught economics at Jawaharlal Nehru University, New Delhi for nearly 35 years, and since January 2021, she has been Professor of Economics at the University of Massachusetts Amherst, US. She has authored and/or edited 20 books and more than 200 scholarly articles.

The sun sets over the Mediterranean, casting a golden hue over the Lebanese coastline: but this idyllic scene belies the turbulent reality unfolding just a few miles away. In the Lebanese capital of Beirut, the air is thick with sea salt and tension, as warplanes reverberate relentlessly over ancient streets.

This is not just another chapter in country’s long history of conflict. It is a harrowing narrative of survival and resilience in the face of a renewed onslaught. It began as a whisper—a distant hum of engines high above. But the stillness of the morning quickly gave way to chaos as the sky darkened with the shadows of Israeli warplanes.

In Saida or Sidon, the third-largest city of Lebanon, 40 km south of Beirut, the familiar buzz was a foreboding signal of what was to come. As the bombs began to fall, the city transformed. Streets, once filled with the morning rush of commuters and students, fell eerily silent, punctuated only by the deadly crack of airstrikes. 

I lay in bed on October 1, listening to the familiar rumble of warplanes overhead. But this time, the noise was louder—too loud. The airstrikes were closer, targeting the Ain el-Hilweh refugee camp. The blasts rattled the windows, and my heart sank.

Within moments, Saida was engulfed in fear. Venturing out later, I witnessed the chaos: homes shattered, dust swirling, people huddling in despair. In the heart of Saida lies Ain el-Hilweh, a densely populated Palestinian refugee camp, which was an epicentre of despair that morning.

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I was there not as a journalist but as a resident, my family’s roots deeply entrenched in the fabric of this community. The first bomb landed close to the marketplace. In the place where laughter and chatter were once the soundtrack, now screams filled the air. Buildings, flimsy against the might of the missiles, crumbled. Dust and smoke rose, shrouding the camp in suffocating debris.

Over 71 people perished in Ain el-Delb on September 29—a massacre that left families devastated and streets empty.

When mountains cried

Away from the immediate border, even mountainous towns such as Arab Salim and Kfarhouna suffered. I travelled there from Saida, following the trail of displacement, as residents fled their sanctuaries. The mountains, resolute in their stoic beauty, echoed with explosions. Homes were scarred by shrapnel. At one crowded makeshift shelter, I met Layla, a little girl who had been looking forward to school and to seeing her friends and teachers after the summer break. Now, her eyes wide in fear, she said softly, “I just want to go back to school.” Her wish was a heartbreaking reflection of the shattered innocence of countless children. They have lost their toys, their sense of safety, and, in many cases, their families. These children are growing up amid the constant boom of bombs and the acrid smell of destruction.

Nearby, an elderly man named Khalil recounted the loss of his home in Ghazieh, his narrative punctuated by pauses heavy with grief. The shelter, a microcosm of the broader crisis, was overflowing with similar stories.

Each person I spoke with, added a thread to the tapestry of this conflict—a strand of loss, hope, and enduring spirit. Organisations such as the Nashit Cultural and Social Association worked tirelessly to restore a semblance of childhood, with their volunteers running activities, games and creative sessions.

In the dusty corner of a makeshift shelter, an elderly man from Nabatieh said he had lost one son in a previous conflict, and now, in this latest round of violence, his second son was gone. Sitting with his wife—whom he tenderly called “the mother of the martyr”—he shared his story. “We fled the bombing, but what we’ve lost cannot be replaced,” he said. They left behind everything they knew—their home, their land, and now lived with the uncertainty of ever returning.

The shelters are packed with people like him: families who lost everything and have nowhere to go. When the bombs fell, they had fled, leaving behind not just homes but their histories and memories. For the elderly, the journey was particularly cruel. They could not move quickly, and the harsh conditions of the shelters took their toll.

Alaa, an accountant from Jbeil, recounted the horror of losing her cousins on the first day of the Israeli bombings. “I will never forget the sound of the explosion,” she said. Her uncle’s wife and daughter, and her cousin’s wife and children, all were gone in a single instant. Their house was flattened to rubble.

“They were shredded so badly that civil defence found only body parts,” she whispered, her voice heavy with anguish. Alaa spoke of the panic as her family fled, the roads choked with cars as the bombs fell all around them. “A shell fell on a car ahead of us,” she recalled. “It was burnt to a crisp. The whole family inside was killed.” They spent hours on the road, choking on the smell of burning flesh, away from their loved ones, fearing the worst.

Elio, a filmmaker from Dahiyeh, spoke of the empty streets and the fear that gripped his neighbourhood. “Most people have left their homes,” he said. “But my mom and dad are sick.” His cousin’s son was killed in a bombing near Baalbek, and the family was too afraid to attend the funeral. “People in Dahiyeh remember the destruction in 2006,” he said. “We know Israel isn’t just hitting Hezbollah; they are hitting everyone.”

For Elias, a winemaker in the Beqaa Valley, the war struck close to home, literally. “A missile struck next to my winery,” he told me. “The day of the bombing, I got a message saying anyone near Hezbollah sites should leave immediately. Thirty minutes later, a missile hit.” He moved his family to Byblos but returned to the Beqaa to protect his livelihood. “I want to work,” he said. “This is part of creating peace—refusing to surrender to war.”

The death of olive orchards

The economic consequences of this conflict are as devastating as the human toll. The southern villages of Lebanon, reliant on agriculture, are in ruins. Bombs have obliterated fields and olive orchards, carefully tended over decades, are reduced to ash.

One farmer from Yarin spoke of his heartbreak: “I waited all season to harvest my olives. Now everything is gone. I don’t know how we’ll survive the winter.” Farmers, labourers, and shop owners all face the same grim reality. Even if the fighting stops today, the economic damage will linger for years.

Lebanon’s political paralysis has only deepened the humanitarian crisis. The country has not had an effective government since 2009, with political infighting preventing any meaningful progress. The caretaker government lacks the power to address the economic collapse or the military escalation. Lebanese citizens live in uncertainty, abandoned by their leaders in their hour of greatest need. For those in the south, the situation is worse, caught as they are, between political dysfunction and relentless bombardment.

The three largest religious sects in Lebanon are awarded the highest government posts under a sectarian system that governs the country’s power structure. The Prime Minister must be a Sunni Muslim, the Speaker of Parliament must be a Shia Muslim, and the President must be a Maronite Christian. The powers of the President include approving legislation, choosing the Prime Minister with assistance from Parliament, and managing the military forces.

The Speaker of the Parliament oversees the sessions and organises the operations of the legislative body, while the Prime Minister leads the government and oversees the execution of policies. The lack of consensus among political groupings on a nominee is the cause of the current impasse in the Presidential selection process, which has brought Parliament to a standstill.

‘We rely on our neighbours’

And yet, there is a glimmer of hope. Amid the rubble and despair, I saw people helping each other, sharing what little they had. In one shelters Mohammad Issa, a young man from Ghazieh—took it upon himself to provide free haircuts to displaced people. “They need someone to help ease their burden,” he told me. It was a small act, but it made a difference. It was a reminder that even in the darkest times, there are some who refuse to give up on their humanity.

Lara, an editor in Beirut, spoke of the mutual aid initiatives that had sprung up across the country. “Soup kitchens are popping up,” she said. “People are distributing mattresses, food, and water. They are collecting money for diapers and milk.”

In a country where the state has often failed its people, the community has stepped in. “There’s a viral video of a Christian man with a big cross on his shirt offering free labour and parts to people whose cars broke down,” she said. “People in Lebanon are accustomed to doing this kind of work because we have never really had a strong state. We rely on our neighbours.”

This spirit of solidarity is what keeps Lebanon going. It is what allows people like Mohammad Issa to offer free haircuts and farmers like Elias to continue working their fields. It is what allows children like Layla to still dream of returning to school, even as the world around them crumbles. Despite everything—the destruction, the fear, the loss—the people of southern Lebanon have shown incredible resilience.

They have lived through wars before, and they know what it means to rebuild. “We’ve rebuilt our homes before, and we will do it again,” said Fatima, a young photographer from Houmine al Fauqa. “Our blood has become one with the soil of the south. We stand together, no matter what.”

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As I left Saida that day, the city was eerily quiet. Streets that once bustled with life were empty, shops closed, and the air heavy with tension. Every face I saw was etched with fear of what had happened and of what was still to come. And yet, in the shelters, I also saw determination. Families who had lost everything still held on to the hope that they would one day return home.

Lebanon finds itself caught in a cycle of conflict and instability. Each attack exacerbates the suffering of its people and adds another layer to the political and economic crises.

The international community sends aid, but it is never enough. What Lebanon needs is a real commitment to peace: a chance for its people to live without the constant fear of war. As the bombs fall and the world watches, the question remains: when will the violence end? When will the people of the south finally have the chance to live in peace?

The international community needs to work towards a lasting solution, one that addresses the root causes of the conflict and provides the people of Lebanon with stability. They wait for peace because they deserve nothing less.

Rawan Sayyed is a journalist who works as a content creator and news writer. She has also completed several documentary filmmaking projects.