I WAS chatting last week to an old friend, a former journalist who in his time interviewed some of the 20th century’s most important politicians. Somewhat apocalyptically, I asked him: “When do you think the Third World War will begin?”

Bob replied instantly: “George, it has already started!”

Let’s try – difficult as it might be – to add a little fresh context to the discussion on the Israel-Palestine crisis. I want to look at possible consequences for the wider world. That’s not to avoid the deeper moral issues involved but we also need perspective if we are to find a way forward.

First, oil prices – the default indicator – have surged since the Hamas invasion of Israel. On Friday, Brent crude was trading at $92 a barrel while the US WTI price was $89. Both prices were well up on the week before as markets worried that Iran could be dragged directly into the conflict via Lebanon.

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In fact, the jump in the oil price would have been even greater but for a quiet offer by the Biden administration to reduce sanctions on the Venezuelan regime, in a bid to boost local petroleum output. Plus, the US Government released more oil from its fast-depleting strategic reserve. This in itself shows the Americans are scared of the potential economic contagion arising from events in the Middle East.

These jitters have also spread to the international gas market – which affects most of Scotland’s homes. The day after Hamas launched its surprise attack, the Israeli government ordered the Tamar gas field off its coast to be shut down.

Before that, the field typically met around 70% of Israel’s power generation needs, so Israel needs to import Egyptian gas that normally goes to Europe. One result – liquified natural gas (LNG) prices jumped 40% last week to an eight-month high. Europe is now heavily dependent on LNG imports following the ban on Russian gas. We had all better pray this winter does not get too cold.

The curious thing to date – given the awesome potential for a global catastrophe inherent in the crisis – is that energy prices have not increased by even more in the past fortnight. Some commentators put this down to an understandable unwillingness to confront the possibilities of the conflict generalising to the point of a worldwide catastrophe.

Nevertheless, analysts are busy recalibrating their energy and inflation forecasts. Allianz Trade, the world leader in providing trade credit, is predicting oil will go to $140 a barrel if the regional conflict worsens. Anything like that would trigger two major consequences.

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First, inflation rates will start to rise again. Second, at minimum, central banks will hesitate to cut interest rates till they see where the political and energy situation is going. That increases the chance of a global recession next year.

So far, all this is speculative. But it may explain why Western governments are desperate to minimise the fallout from the Israel-Hamas war and to broker a ceasefire if possible – a big ask.

It also explains the presence of two US carrier groups in the eastern Mediterranean, plus a rather ridiculous couple of British gunboats. However, it will take more than a couple of (very vulnerable) American aircraft carriers to stop the Middle East cauldron boiling over.

Start with the obvious elephant in the room – Iran. How likely in reality is the Tehran regime to get involved in the shooting war? Despite the ingrained hysteria of the US right-wing, Iran remains cautious. Keeping the US and nuclear-armed Israel at bay through fighting battles beyond Iran’s borders has been a crucial doctrine in Tehran’s security agenda. This approach was a key policy of Qasem Soleimani, head of the Quds Forces, who was assassinated in a US air strike in 2020. Tellingly, Iran dodged a full-blown war with America after Soleimani’s provocative death.

However, Tehran does use proxies. Last week, Iranian state TV ran a report suggesting how these proxies could attack Israel from three different directions – Hezbollah from the north, Yemen’s Houthis from the south and militias in Iraq and Syria from the east.

These groups could shower Israel with Iranian-supplied rockets if Gaza is invaded, prompting both US and Israeli retaliation.

As a foretaste, US Navy ships last week intercepted three Houthi cruise missiles headed toward Israel. Also, American military bases in Iraq and Syria were targeted in at least three separate drone attacks, killing one civilian contractor. I don’t think any of this news made the British papers.

However, attacking Israel directly is not necessarily the most realistic route for a cautious Tehran to pursue. It would only take a few (deniable) rubber dinghies firing rockets at passing oil tankers to close the Strait of Hormuz, the single most important passage for transporting crude oil from the Gulf. Try that on global energy prices and see what happens. Which suggests the world as a whole has a vested interest in negotiating some pathway out of the crisis.

With so much at stake, it is no surprise that other regional players have become embroiled in the Israel-Hamas war. Turkey is the coming economic powerhouse in the Middle and Near East. In fact, the Turkish economy is on the verge of overtaking Russia’s in scale.

President Recep Erdogan is using this economic muscle for diplomatic ends during the crisis. He is repairing damaged relations with Israel while at the same time talking directly with the leaders of Hamas.

But Erdogan is capable of throwing his weight around. Earlier this month, Turkish security forces attacked Kurdish militants in northern Syria, close allies of the Americans. In retaliation, US forces shot down a Turkish drone – and Turkey is a Nato member.

This episode shows 1) that America, as well as Israel, has lost prestige in the region; and 2) that the shooting war is spreading. Another example – Turkey was also deeply involved in helping Azerbaijan recapture the disputed Nagorno-Karabakh enclave last month, forcing 100,000 ethnic Armenians to flee.

Erdogan is happily using force to redraw the map. The Turkish and Azerbaijani military are now holding joint exercises. Did anyone notice?

Incidentally, Israel was also involved here – it gets oil from Azerbaijan. Just weeks before Azerbaijan launched its 24-hour blitz on September 19, Azerbaijani military cargo planes repeatedly flew between a southern Israeli air base and an airfield near Nagorno-Karabakh, carrying weapons supplies.

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The Azerbaijani offensive killed more than 200 Armenians as well as precipitating the ethnic cleansing. Some Israeli commentators have speculated that one reason Netanyahu took his eyes off Hamas was because he was preoccupied with playing power games in Caucasus.

A wider conflagration in the Middle East is entirely possible – a fire that could spread instantly to North Africa and Central Asia.

The fault line isn’t simply the Israel-Hamas conflict but that is certainly the weak link.

At the same time, US domestic politics is more fractured than at any time since the Civil War. Enough said about the farce that has been the Tory government in Britain. And in Europe, even Germany – with its broken economic model – is swinging inexorably to the populist, nativist right. The grown-ups have left the room just when we need them most.