Escalating

Fuel prices are up today. This is not due to increased global demand or lesser supply. It is due mainly to fears of a wider war in the Middle East.

The past few days, Hezbollah has been escalating its missile barrage on Israel. The escalation is a response to bold strikes conducted by Israel against Hezbollah commanders and fighters.

On Sept. 17, thousands of pagers imported into Lebanon by Hezbollah exploded simultaneously. Since the technology is almost exclusively used by the militia group, it should be fair to assume that the majority of those killed and injured were Hezbollah partisans.

The militia procured thousands of pagers for its use to avoid using mobile phones that are easily monitored by Israeli intelligence. The decision to use older communications technology backfired spectacularly. The imported pagers were obviously intercepted by Israeli operatives and armed with small explosive devices.

The very next day, Hezbollah walkie-talkies exploded simultaneously in the same spectacular fashion, killing and wounding even more militia fighters. As in the case of the exploding pagers, the walkie-talkies were imported in bulk by Hezbollah for the same reason they brought in pagers.

Then the day after that, unable to communicate using pagers or walkie-talkies, senior Hezbollah commanders assembled in a building in Beirut. They were promptly struck by the Israeli air force, using precision missiles. The second ranking Hezbollah commander was killed in that strike.

Understandably, the Hezbollah has been seriously embarrassed by this string of setbacks. For all their sound and fury, Israeli craftiness made the militia group appear like bungling Keystone cops.

The first impulse of Hezbollah is to intensify missile launches against Israel. But at the same time, Hezbollah would want to engage Israeli forces in a ground war in southern Lebanon. That is a precarious balance they want to strike.

With the Hezbollah in such disarray because of the pager/walkie-talkie attacks and with so many of their fighters nursing their injuries in hospitals, this should be the best time for Israel to mount a ground offensive aimed at destroying the group’s missile-launching capabilities. Reports from the ground suggest Tel Aviv has been moving artillery and troops from the border with Gaza northwards to the border with Lebanon.

The Netanyahu government in Tel Aviv, despite global criticism of the level of civilian casualties in Gaza, is determined to completely degrade the fighting capacity of both Hamas and Hezbollah. This is the only way to secure Israeli cities from constant missile barrages.

However, a ground campaign against Hezbollah will transform southern Lebanon into something that looks like Gaza today: a surreal landscape of utter devastation. The global outcry will be just as resounding. But Tel Aviv thinks there is no other option.

A ground offensive in southern Lebanon will likely draw other militia groups into the fighting. There is about a score of distinct militia groups in Iraq and Syria armed and financed by Iran. Some of them have mounted attacks on US military facilities in Jordan, Syria and Iraq the past few months.

More important, a deteriorating situation in southern Lebanon could bring Houthi fighters into the battle. The Iran-armed and financed militia group based in Yemen recently announced they were sending a ground force to support the Hezbollah. A few weeks ago, they managed to send a missile flying from far-off Yemen to central Israel, hitting a bridge outside of Tel Aviv.

For months, the Houthis have been attacking commercial shipping moving up the Red Sea to the Suez Canal. Because of these attacks, many cargo ships have opted to take the longer route to southern Africa to link up the European and Asian markets. This has meant additional costs for the transport of goods. A small international naval force is now stationed in the Red Sea to deter Houthi attacks.

If the Houthis escalate their involvement in the war, they could mount attacks against Saudi Arabian oil facilities. They have managed to bomb some of these facilities in the past. Saudi Arabia and Iran are rivals for regional supremacy. A new round of fighting between the Houthis and the Saudis will inevitably draw Iran into the equation.

Iran has been threatening retaliation for the assassination of a senior Hamas leader right at the heart of Tehran. They have yet to act on that threat. The US and her European allies have stationed warships in the Mediterranean and the Persian Gulf to dissuade Iran from launching attacks on Israel.

Iran is suspected to have developed nuclear-weapons capability. In the worst case scenario, they could use nuclear-tipped missiles against Israel. That will surely invite full-scale US involvement in the region.

When Iran launched missiles at Israel a few months ago, Saudi Arabia along with Jordan helped intercept some of them. Riyadh is particularly concerned over growing Iranian influence in the region.

It is this scenario of full-scale war in the Middle East that is sowing fear in the markets. When there is fear in the markets, prices rise. Therefore, the rest of the world (the Philippines included) cannot be insulated from the deteriorating situation between Israel and her neighbors.

Before the recent escalation, oil prices were beginning to climb down. US strategic reserves have been replenished. Chinese demand is waning because of a weakened domestic economy. Despite OPEC efforts to limit production, supply exceeded demand.

The trend, obviously, will not last.