Neither Israel Nor Hezbollah Want All-Out War

There is growing concern that any significant escalation in the Israel-Hezbollah conflict would disrupt gas supplies, first and foremost to Egypt, which is monitoring this with a fair amount of dread. The situation continues to intensify. On Tuesday, Israel launched its deepest strike into Israeli territory yet, hitting Hezbollah's air defense systems in Janta, only about 50 miles outside of Beirut. Hezbollah then retaliated with a strike on an Israeli military base in the Golan Heights that killed two civilians. 

On Wednesday, Hezbollah chief Hassan Nasrallah met with Hamas, indicating it, too, would accept any Hamas decision on Gaza truce talks and would halt attacks on Israel if there was an Israel-Hamas peace deal. An all-out war with Israel would very likely erode Hezbollah's political power in Lebanon. However, should this turn into an all-out war, Iran-backed groups across the board have said they would join forces to fight Israel. While Hezbollah appears to be attempting to walk things back, its "allies" in Yemen (Houthis), Iraq (pro-Iranian militias) and Syria are chomping at the bit for more action, with little regard for Hezbollah's position in Lebanon. Only a month ago, though, Nasrallah threatened to strike Israeli energy facilities in retribution. For Egypt, the prospect of a war is devastating from an energy perspective, despite the fact that Israel in late June revealed plans to double the amount of gas it will export with a $500M investment in the expansion of the offshore Leviathan gas field. This will greatly benefit Egypt-Israel's biggest customer, but it's years away from being realized. 

But if there is an all-out war with Lebanon, some analysts believe that Israel would be first to shut-in part or all of its offshore production, as it was forced to shut down its smaller offshore Tamar production from Chevron at the start of the conflict with Hamas. (Tamar is operating again). 

Leviathan, Tamar and Karish, its newest field that overlaps a maritime border with Lebanon. 

U.S. and Israeli military officials say Hezbollah can reach them all. This is not the Hezbollah of 2006 (the previous Israel-Lebanon conflict). Today, Hezbollah is said to have an estimated 150,000 missiles thanks to Iranian supplies that have seen an uptick since the last conflict, as well as more advanced weaponry that has come from Syria and Russia. 

However, the bulk of Hezbollah's missiles are short-range (only a few dozen kilometers), but most estimates calculate that the group has enough longer-range missiles to do serious damage, even if not in a sustained manner. 

These weapons are intended as a sort of Iranian hedge against an Israeli attack on Iran. But if the conflict were to escalate into a war, Iran would lose its insurance policy and all bets would be off. As we have stated in the recent past, Hezbollah (by all indications) is attempting to avoid a war, though its orders are essentially aligned with Iran's Quds Force. 

Israel, too, wants to avoid an all-out war, despite what some may think. While it continues to target high-level Hezbollah commanders (they track them by cell phone signals and cameras in border areas) with one arm, they keep extending olive branches with the other. The objective is clearly to find a diplomatic solution in the end. Like Nasrallah, Israel has also said it would cease airstrikes on Lebanon once there is a peace deal for Gaza. 

Both sides continue to make sure their responses do not tip this over the edge into a war. That's why Hezbollah is not currently targeting Israeli energy installations. When it does, we know war is here.