If one event dominates the coming year, it will almost certainly be the U.S. presidential election. Barring something unexpected, we are likely to see a rematch of Joe Biden vs. Donald Trump, with the outcome being perilously uncertain. One year out, polls in key swing states give Trump the advantage.

The election will matter not just for the United States but for the world. The outcome may hinge on the 2024 economic outlook, which in turn will partly depend on how the latest conflagration in the Middle East evolves. My best guess (and worst nightmare) is that Israel will continue to ignore international pleas for a cease-fire in Gaza, where 2.3 million Palestinians have been destitute for decades. What I saw during a visit in the late 1990s as the World Bank’s chief economist was heart-wrenching enough, and the situation has only gotten worse since Israel and Egypt imposed a full blockade 16 years ago in response to Hamas’s takeover of the enclave.

Regardless of the atrocities carried out by Hamas on Oct. 7, the Arab street will not tolerate the brutality being visited on Gaza. Given this, it is hard to see how we can avoid a repeat of 1973, when OPEC’s Arab members organized an oil embargo against countries that had stood by Israel in the Yom Kippur War. This retaliatory measure would not really cost Middle Eastern oil producers, because the increase in prices would make up for the reduction in supplies. No wonder the World Bank and others have already been warning that oil prices could rise to $150 per barrel or higher. That would trigger another bout of supply-driven inflation, just as the post-pandemic inflation is being brought under control.