War in 2024
Summary: the oil market suggests that investors have, overall,
learned to live with the current crisis in the Middle East, as well as
the Russia/Ukraine war and China/Taiwan tensions. However, they still
need to beware of less high profile war risk, consistent with the
turbulent times in which we live.
We thank our regular contributor Alastair Newton for today's
newsletter. Alastair worked as a professional political analyst in the
City of London from 2005 to 2015. Before that he spent 20 years as a
career diplomat with the British Diplomatic Service. In 2015 he
co-founded and is a director of Alavan Business Advisory Ltd. You can
find Alastair’s latest AD podcast, Oil: the long good-bye here.
“The number of state-based conflicts, at over 50, is near its
highest level since 1946, according to the Peace Research Institute
Oslo.”
The Economist, 22 January 2024
I have read several forecasts for this year which have extrapolated
from the start of the Russia/Ukraine war in 2022 and the Israel/Hamas
conflict in 2023 to award a non-negligible probability to another major
war breaking out in 2024, e.g. and notably a Chinese invasion of Taiwan.
Not only does this overstate this particular probability, it also risks
blind-siding us relative to a growing number of smaller scale, but
still worrisome, violent conflicts.
This wider pattern is what history tells us we should expect at the end of a hegemony, what The Economist described as “chaotic global circumstances”.
As the article went on to argue, although the Biden Administration has
reversed some of the damage done to US influence and alliances by its
predecessor, if Donald Trump is back in the Oval Office next year, this
will prove short-lived. Furthermore: “…as the clock ticks down on a
tight election the effectiveness of the Biden doctrine may [already] be
in decline.”
Acknowledging that Iran’s overarching ‘axis of resistance’
has much to answer for, the complicated dynamics of the Middle East
include several such cases capable of catching unawares all but the real
experts, as this article by the BBC’s Raffi Berg makes clear. For example, although Turkish strikes on Kurdish militia in Iraq and Syria should have come as no surprise, who expected Jordan
to launch strikes against Iran-backed militia in Syria? Or, for that
matter, for Iran and Pakistan to exchange tit-for-tat missile strikes
against Baloch separatists, causing the BBC’s Lyse Doucet to write (in a 20 January article):
“This past week has been a reminder, if one was needed, of the
unpredictability and peril in this moment of a widening and worsening
Israel-Gaza war?”
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