That risk is very real as the Israeli army prepares to invade the Gaza Strip in response to a militant attack.
There are also growing fears that militants in Lebanon and Syria who support Hamas will join the fighting.
Apart from that, a sharper escalation could bring Israel into direct conflict with Iran.
In that scenario oil prices could soar to $150 a barrel and global growth drop to 1.7% – a recession that takes about $1 trillion off world output.
Conflict in the Middle East can also shake the entire world, as the region is a crucial energy supplier and a key sea route. The most prominent example of this is the 1973 Arab-Israeli war, which led to an oil embargo and years of stagflation in industrialized countries.
No matter how events develop next, the conclusion is that hopes for a more stable Middle East have been dashed and there is no end in sight to decades of strife.
The whole world faces new conflict amid the ongoing Ukraine crisis, the US-China trade war and rising tensions over Taiwan.
