Terror in Israel: Economic consequences depend on oil price development

"The attack against Israel is first and foremost a human drama. We are shocked by the outbreak of violence and feel great sorrow for the victims.

The reaction of the oil price is central to the economic consequences of this conflict. As long as the major oil producers in the region do not react or are not affected by the conflict, the immediate economic impact will be small. At present, there are no signs that the oil producers will become more involved. Saudi Arabia and the United Arab Emirates' relations with Israel have tended to improve recently. At least previous Palestinian terrorist attacks in Israel had not led to an escalation of the conflict.

The price of oil had risen in the short term, but not dramatically. It has not yet returned to the high levels seen at the end of September. There have also been no signs of disruptions to key trade routes. Overall, therefore, the risk to the global economy seems rather low at the moment.

However, the conflict is another potential source of tension in the geopolitical dispute between the US and Europe on the one hand and the BRICS countries on the other. These now include Iran and Saudi Arabia. If sanctions against Iran are tightened or enforced as a result of the conflict, oil prices could rise further.

In quantitative terms, Israel does not play a significant role in Germany's foreign trade—only 0.4 percent of goods exports recently went to the country. The share of imports is even less than half that.”