By David Odunisi

The Israel-Palestine conflict has been one of the most protracted and complex disputes in modern history, with far-reaching consequences extending well beyond the borders of these two territories. The recent escalation, following Hamas’s surprise offensive against Israel on October 7, 2023, has not only intensified the conflict but also created significant socio-economic impacts for North African countries that have substantial trade and religious links with both warring parties. Less than 48 hours after the attacks, global oil prices spiked by almost 5% for November and December deliveries, and gas prices surged 12% higher, reflecting concerns that the conflict could spread across the Middle East and disrupt major global oil producers. This spike in energy prices is indicative of a broader economic impact, as Israel’s suspension of production at the Chevron-operated Tamar gas field off the coast near Gaza has heightened fears of supply disruptions. The resulting “zone of uncertainty” in energy markets highlights the interconnectedness of global trade and underscores the vulnerability of North African nations to regional conflicts, further stressing their socio-economic stability.

The escalating Israel-Palestine war threatens to disrupt trade flows between North African nations and the Middle East. Data shows North African countries have significant trade ties with the region that could be impacted. For example, Palestine imported $302 million worth of goods from Egypt, which is the link between Northeast Africa and the Middle East, in 2022—a trade route that may face disruptions due to instability. Morocco had $180 million trade with Israel in 2022, a trade partnership that could be strained by the conflict. The war may also lead to volatility in global energy markets, affecting both oil/gas importers like Palestine ($1.32 billion in 2022 global trade). With the Middle East a key supplier of fuel and other commodities to North Africa, any protracted hostilities risk higher prices and potential shortages for these vital imports.

For African nations still reeling from the body blows delivered by the Ukraine conflict—including bouts of staggering inflation, supply chain challenges, and potential fuel shortages—avoiding a similar heavy hit from the current Israel-Hamas fighting may bring some small relief. As one commentary (Mahmoud El May) framed it, this Middle East crisis is “unlikely to have the same repercussions on African importers as the war in Ukraine.”

That relatively sanguine assessment, however, may be faint consolation for countries struggling with elevated energy prices and strained household budgets. The conflict also injects another complicating dimension into the region’s diplomacy amid carefully calibrated responses condemning the civilian toll while supporting Palestinian rights and managing evolving ties with Israel.

Further complicating the landscape is the broader geopolitical implications of the conflict. North African nations are navigating a complex web of alliances and rivalries that influence their responses to the conflict. For instance, Algeria, a staunch supporter of Palestinian rights, might find its diplomatic stance hardening further, impacting its trade relations with countries perceived as allies of Israel. Conversely, Morocco, which normalized relations with Israel under the Abraham Accords in 2020, might face internal and regional pressures to reassess its position.

Energy markets are particularly sensitive to geopolitical instability in the Middle East, a region that supplies a significant portion of the world’s oil and gas. The suspension of operations at the Tamar gas field by Israel underscores the potential for immediate and tangible impacts on energy supplies. This move not only affects Israel’s energy security but also has broader implications for global energy markets, which are already experiencing volatility due to various global disruptions.

The prospect of prolonged conflict raises the specter of sustained energy price increases. Higher oil and gas prices could exacerbate inflationary pressures worldwide, particularly in economies already struggling with high inflation rates. For African nations, which are heavily dependent on energy imports, this could translate into increased costs for fuel and electricity, further straining household budgets and economic growth.

Moreover, the conflict’s potential to disrupt trade routes between North Africa and the Middle East adds another layer of complexity. Trade disruptions could affect the availability of goods and services, leading to shortages and higher prices. This is particularly concerning for countries like Egypt, which serves as a critical link between Africa and the Middle East, and whose trade routes might be directly impacted by regional instability.

The recent escalation in the Israel-Palestine conflict has introduced a new dimension of uncertainty into global markets, particularly in the energy sector. The potential for supply disruptions and increased energy prices could have far-reaching implications for economies worldwide, especially for North African nations already grappling with economic challenges. As the situation continues to evolve, the impact on trade flows, diplomatic relations, and economic stability remains uncertain, highlighting the interconnectedness of global markets and the far-reaching consequences of regional conflicts.

REFERENCES

– Khadija, T. (2024, March 4). Morocco-Israel trade exchange drops by 60% amid war on Gaza. Hespress English. https://en.hespress.com/80852-morocco-israel-trade-exchange-drops-by-60-amid-war-on-gaza.html

– Safaa, K. (2023, June 4)Morocco-Israel Trade Reaches Nearly $29 Million as of April. Morocco World News. https://www.moroccoworldnews.com/2023/06/355776/morocco-israel-trade-reaches-nearly-29-million-as-of-april

– Annual International Trade Statistics by Country. (2024, Jan 28). Trendy Economy. https://trendeconomy.com/data/h2/Palestine/TOTAL – Maher, H. (2023, October 11). “Oil, gas. How will the Hamas-Israel war affect Africa?”. The African Report. https://www.theafricareport.com/324662/oil-gas-how-will-the-hamas-israel-war-affect-africa/