World Leaders Speak at UN as Tensions Grow Across Middle East

Global news headlines continue to be dominated by the fragile geopolitical situation in the Middle East and diplomatic efforts to contain the violence. With a host of world leaders at the United Nations in New York, attention will today centre on Benjamin Netanyahu who is set to give a speech to the General Assembly following his comments that Israel will “continue to hit Hezbollah with all our might”.

Following hundreds of airstrikes throughout the week, the Lebanese government said that Israeli attacks killed 92 people yesterday.

Speaking to the UN, Israel’s Ambassador said that “No nation would sit idly by as their citizens were attacked” and outlined how “over the past week Israel has been conducting precise strikes in Lebanon against Hezbollah’s command centres”. Though, with hundreds of people being killed in Lebanon and an estimated 200,000 Lebanese now internally displaced, along with more than 60,000 northern Israelis, world leaders have urged restraint.

As we looked at yesterday, a 12-member bloc made up of the UK, US, Australia, Canada, the EU, France, Germany, Italy, Japan, Saudi Arabia, the United Arab Emirates, and Qatar have called for a 21-day ceasefire in Lebanon.

This comes as the UN Secretary General António Guterres warned that “hell is breaking loose in Lebanon” and the UK’s Foreign Secretary David Lammy said that “we are on the brink, the precipice.” Lammy’s comments come alongside that of the PMs who reiterated calls for a ceasefire in Lebanon as well as a further ceasefire in Gaza and release of hostages held by Hamas.

Speculation continues to mount over whether the IDF will launch a ground offensive in Lebanon against Hezbollah. Yesterday, one Major General in the Israeli Airforce indicated that personnel should be “prepared, if activated” to assist with a ground operation there. He added that the Airforce is committed to trying to prevent the movement of arms between Iran and Hezbollah.

Yesterday, the Financial Times reported that Saudi Arabia were “ready to abandon” their $100 per barrel target for crude oil in order to restore their market share. According to the FT’s Tom Wilson, “Saudi Arabia needs an oil price of close to $100 a barrel to balance its budget”, however yesterday signalled that the country may seek to move away from such a target in order to increase output.

With oil prices under pressure for much of the last year, Saudi Arabia have been at the forefront of calls for OPEC+ to cut production in order to raise prices.

For example, earlier this month WTI briefly fell below $66 dollars per barrel, bringing the commodity to its lowest level since March 2023, and marks a considerable move from April’s year-to-date highs when prices rose above $86 dollars per barrel.

Yesterday’s report put further pressure on oil prices (which have slid 9.5% on the month) and comes as markets expect to see OPEC+ increase output in December.

Away from supply-side considerations, markets continue to consider demand-side concerns from the world largest importer of crude oil, China. Given that China imports some 25% of the world’s crude oil, concerns China facing headwinds in the form of a downturn in consumption, fragility in local government debt and a precarious property sector, have put demand-side pressures on oil prices.

Today’s key data includes the release of Eurozone consumer confidence figures at 10:00 ahead of US PCE figures at 1330. This will be followed by the publication of Michigan Consumer Sentiment figures at 1500 alongside a host of central bank speakers including the ECB’s Philip Lane and Piero Cipollone as well as the Fed’s Michelle Bowman.