Wednesday, May 22, 2024 | 17:33 WIB

Oil price biting inflation – a reaction of Middle East conflict

Jakarta, IO – Attacks by the US Navy and UK against the Houthis of Yemen have raised concerns about the expansion and prolonging of the Middle East conflict, as well as its ramifications, principally a drastic escalation of crude oil and other commodity prices. 

As a reaction to the ethnic cleansing leading to genocide of the Palestinians in Gaza (including, let us not forget, the killing many Christian Arabs), Houthi rebels have continuously attacked ships traffic transiting the Red Sea, creating havoc and dangers for vessels and crews, such that Maersk, a Danish cargo company, has decreed a termination of passage of its ship along this channel to the Mediterranean. What’s more, British oil company Bp. Has followed suit, and other shipping lines may decide it is too risky to attempt to scoot by. 

The US action may have the effect of escalating and prolonging the Middle East conflict, thus imperiling the oil and gas trade, as well as general cargoes heading for the Suez Canal. While being firm in his commitment to defend the Red Sea route by sending in the modern fighter carrier Gerry Ford, President Biden is also concerned about its implication on trade flows, both for oil and gas and general cargoes, and the ramification on inflation as part of the impact. The huge detour around the African continent, passing the Cape of Good Hope, adds 5000 miles to the route, entailing an enormous increase in fuel expenses and loss of time. Shipping costs will skyrocket, and prices soon track their rise, resulting in steeply higher inflation. 

The price of oil has already flinched, jumping USD 4.00 to USD 80 per barrel, signifying unavoidable inflationary pressure. 

J. Soedradjad Djiwandono
J. Soedradjad Djiwandono, Emeritus Professor of Economics, Faculty of Economics and Business, Universitas Indonesia, and Adjunct Professor of International Economics, S. Rajaratnam School of International Studies (RSIS), Nanyang Technological University (NTU), Singapore.

The US attacks against the Houthis in Yemen, supported by its British vassal, has caught them in a dilemma, unsure about whether to limit their violent escalation of the Middle East conflict or accelerate it. 

The Houthis count themselves as part of an “Axis of Resistance” which includes Hamas and Hezbollah. The US and UK attacks have aroused Russian protests, claiming that the attack blatantly ignores the sovereignty of Yemen. 

So, for sure the Middle East conflict has become more complex and spread wider than before. Any resolution will certainly be more difficult to reach, while continuing attacks and counterattacks will surely increase civilian deaths. 

Related to the continuing Israeli counterattacks on Hamas in Gaza, it was reported recently that the Indonesian Government was in support of South Africa’s President Cyril Ramaphosa‘s bringing Israel PM Netanyahu to the International Tribunal of the Hague. Bravo for Indonesia. Hopefully, more countries will support the petition, so that the Tribunal will not hesitate to convene and decide whether PM Netanyahu is guilty as charged, of committing crime against humanity, murdering thousands of civilians of Palestinian in Gaza (22,000) in spite of the Israeli’s defense that they did it to retaliate the Hamas attacks that killed 1,200 Israelis. 

Read: Achieving SDGs In Remote Areas: Transforming Bureaucracy

I am not sure regarding the requirement for the Tribunal to accept any case of “war crime”, but the Tribunal had experiences as was done against Croatia President Zoran Milanovic, who led killings against Serbian civilians. But of course, as I had mentioned in my previous writing, they still face constraint, for lack of support from the US, which is concerned about the US Army’s possible problem regarding their operations in Vietnam in the 1960s that caused hundreds of thousands of civilian deaths as well. But certainly, there is no exception on the rule against murdering innocent people, no matter what. And it is not possible that the US Government does not understand this. 

On this score, in ASEAN I hope there would be more concerted efforts from the leaders to Come to a resolution for dealing with the Rohingya problem and restart the discussion with the Myanmar Junta, to be willing to accept the proposal to start talks with the Rohingya leaders, with the coordination of the UN to at least end the raids and burning of the Rohingya villages, toward recognizing them as their citizens and start treating them as equal with others, in spite of their religious differences, that they are Moslems, while the people of Myanmar are Buddhists. And on this issue, there are still cases of the Uighur in China, and Moslems in Georgia. These are problems of human right violations that must be resolved, period.