The bond market remains ruptured as even the gods of Wall Street are held ransom to the permalink between the fortunes of oil and the state of future interest rates. As oil prices traverse a piste of moguls that one day show diplomatic breakthrough, the next threats of further military action and/or concentration sometimes centring on feedstock being increasingly available from the Middle East only to flip back to the paucity of global refined fuel inventory, they cement the inverse correlation between oil and bonds. It is interesting to ponder on how the exceptionalism experienced in the US stock markets might have enjoyed even more success if it were not for the continued reminders of what it costs the world if energy plots a future of being more expensive. Outstanding recent results from Micron, and then today, the blowout third-quarter forecast from Samsung and TSMC would have had tech-bulls slashing a swathe through any naysaying on the mind-boggling billions being spent on every aspect of the A.I. buildout. But rampant yields, agitated by geopolitical anxiety and the realisation that whatever wondrous workarounds being practiced in getting oil to market from Gulf states are being used up, show little sign in retreating. Oil and energy prices are never covert, they scream their presence in any business, but their insidious reach into the ruminations of inflation are causing quite the worry and that which might have been overlooked and explained away, such as the A.I. debt burden, as ‘phenomenon’ or a ‘new way’ of doing business is starting to ring a little hollow.

Three years on, and it is worse

We have a liking for the word ‘peripeteia’. In literary terms, for which it is ordinarily used, it is to describe an unexpected reversal of fortune or change in circumstance in a play, epic or literary canon, but can be expanded into modern usage of plot twists in films, books and even aligned with world-changing events. Can there be any doubt that at the third anniversary of the murderous attack into Israel by Hamas, the world has been forever altered? Anyone putting pen to paper, as we well know, or making public statements is always at risk of a backfiring, but to put into context how much of a shock the 7th of October 2023 attacks were, the US National Security Advisor of the time, Jake Sullivan, within the Biden Administration, only two weeks previously spoke on how the Middle East region was "quieter today than it has been in two decades."

In fairness, Israel at the time was in state of navel gazing. There had been four elections in the span of three years, Benjamin Netanyahu had been subject to criminal indictments, and the country was struggling with religion versus state concerns as well as a rising cost of living. Insular, defensive and lacking confidence in the ruling politicians it very much looked as if Israel would be riven by division particularly as the controversial ‘Bibi’ has made his way back to the top of the political pole with the aid of the powerful, far right, religious vote. Whatever prompted the disgraceful rampage of killing that sad day, it has in hindsight proved very much to be a bloody miscalculation and turned a nation’s inward gaze to one of reactive existentialism. In its heartbreak and anger, retribution was launched and as if mimicking the hands of a clock, Israel chose to sweep the area of its immediate foes in Gaza, Lebanon, Syria and sporadic elsewhere perceived defilers to finally dwell on the root of all its enmity, Iran.

The circumstance and resounding victory of Donald Trump in the US 2024 election would be disingenuous to attribute to the October 7 attacks. But the attitude of Kamala Harris, Trump’s Democratic adversary of the time, seemed to be less than pro-Israel and, as Vice President, did not preside over a Netanyahu speech to Congress which was viewed as something of a snub. Given the Christian right’s support of Israel and Washington’s fear, no matter political persuasion, of Iran ever achieving nuclear capability, it is hard to argue that Israel’s pain did not contribute to American voting. With Trump safely ensconced in the White House and his historical links with Netanyahu, be they politically or accusatory nefarious, they have a shared antagonism of Iran.

Not even the disproportionate fury, or as some say, genocide, meted by Israel upon the population of Gaza evokes much reaction from what would be deemed sympathisers to the Palestinian cause. Shock at the barbarism of the Oct 7th attack, widespread mistrust of Iran and strategic realpolitik of keeping defence and economic ties with the US-led West means there has only been half-hearted mouthing of protests from Egypt, Saudi Arabia, UAE, Qatar and others. The horrendous existence of the Gazan population is yet another example of almost acceptable collateral damage as the world falls from globalisation to beggar thy neighbour. 

Donald Trump is phenomenon unto himself. There will never be another like him. It just so happens that his sympathies, matched by Israel and quietly accepted by those happy to see Iran put back into a managed box are all sponsors to this current verse in a long line of chapters that make up the Middle East book of war. Just as 9/11 triggered decades of fallout from the disastrous ‘war on terror’, October 7th started a cascade of events that has led us to our current state of Arabian attrition and whatever consequences unfold they are likely to match or even outdo the negative influence of those fatal attacks on the US at the start of this century. 

The currency of the Middle East and the currency of war is oil. When the two are combined the world changes, and it is never for the better. New pipelines might be constructed, shipping rerouted and new forms of energy hurried along. But as the word ‘security’ finds greater importance in borders, economies and energy; trusted practices and accepted trading agreements, already made bad by Trumponomics, will see another surge in global nationalism. Just look at what is going on in mainland Europe. Qualifying October the 7th as the sole reason for both changed oil communication and a global geopolitical landscape is a stretch, but by any standard it has been a massive participle and its influence is not done with.

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