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“Our base-case scenario remains that military confrontation will be relatively short lived.”
By Globes
Despite the intensity of the Operation Rising Lion, Israel’s global rating remains resilient, S&P said in an update Monday for investors headlined “Middle East Conflict Is Starting to Strain Credit Channels Across Sectors,” Globes reported.
“Israel’s wealthy economy has historically been resilient not least due its sizable high-tech services sector, with a high percentage of employees able to work from home. This should somewhat cushion the impact of security disruptions,” S&P said.
However, “Israel’s small size and high population density suggest the socioeconomic and fiscal fallout from physical damage to infrastructure could be sizable.”
“The gravity of the situation has moved from high to severe in our pre-defined scenarios and consequently, the potential for events to weaken credit quality across sectors has increased,” the report continues.
“Our base-case scenario remains that military confrontation will be relatively short lived. However, public statements of US military operations lasting up to one month and the nature of US and Israeli military objectives–including regime change–are far broader than those relating to the 12-day war in June 2025. The intensity and geographic reach of attacks are also far wider than those seen last year. The conflict is already affecting trade and supply routes, including the Strait of Hormuz, and energy prices and aviation, with airspace closed across the region.”
Brent crude oil reportedly jumped 10 percent to about $80 a barrel over the counter on Sunday, the day after the launch of Operation Rising Lion, and analysts have predicted that prices could climb as high as $100.
“The suspension of the vast majority of shipping through the Strait of Hormuz and the rise in over-the counter Brent oil and liquefied natural gas prices are perhaps the most concrete market responses to the conflict so far,” S&P noted.
Furthermore, Ebrahim Jabari, a senior adviser to the Iran Revolutionary Guard Corps commander-in-chief, said Monday: “The Strait [of Hormuz] is closed. If anyone tries to pass, the heroes of the Revolutionary Guards and the regular navy will set those ships ablaze.”
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