Vowing retribution but urged to show restraint, Israel has yet to agree on its response to an expansive drone and missile strike carried out on its territories by Iran on Saturday.

A Monday meeting of Israel’s five-person war Cabinet, headed by Prime Minister Benjamin Netanyahu, concluded without comment on whether the Jewish state will honor its pledge to “exact a price” from Tehran or concede to calls for a measured response from international leaders.

The prolonged deliberation came after the Israeli military said that Iran on Saturday fired more than 300 drones and missiles at its soil. It claimed that it and international allies eliminated 99% of these attacks as part of its now-dubbed “Iron Shield” operation.

The U.S., U.K., France and Jordan assisted in intercepting these threats. Tehran said its assault was in response to an Israeli strike that killed several top commanders at an Iranian consulate in Damascus, Syria, on April 1 — an offensive for which Israel has yet to claim responsibility.

Iran said the Saturday hostilities have “concluded” its retaliation — and Israel is now left to consider next steps.

The Israeli war Cabinet is set to meet again Tuesday, according to Reuters. The prime minister’s office and Foreign Ministry did not immediately respond to a CNBC request for comment.

Speaking after the Cabinet’s Monday gathering, an Israeli official said that the country’s decision-makers believe it is important for any potential response to closely follow the attack, and that such a gesture would be coordinated with Washington, NBC News reports.

Concerns are mounting that the conflict — rooted in the Oct. 7 terror attack undertaken by Palestinian militant group Hamas and Israel’s retaliatory war campaign in the Gaza Strip — will seep into the broader Middle East region. Since October, Israel has traded fire with a spate of other Iran-supported factions, such as Lebanon’s Hezbollah, Yemeni Houthis and Bashar Assad’s Syrian administration.

Global markets have also been rattled by the hostilities. Oil prices have been bolstered by the potential for disruptions from heavyweight crude producer Iran, and international maritime trade has faced delays and suspensions amid Houthi attacks in the Red Sea.

“There are those in the war Cabinet now who will be pushing for a wider campaign in Lebanon against Hezbollah, against Iran itself to take advantage of this moment,” Julien Barnes-Dacey, director of the Middle East and North Africa program at the European Council on Foreign Relations, said Tuesday on CNBC’s “Street Signs Europe.”

Netanyahu, who has previously battled fraud and corruption charges and civil protests over his proposed judicial reforms, faces domestic pressure to assume a hard line against Iran – and international ones to stand down.

In a Google-translated social media post, Israel’s foreign minister, Israel Katz, said he is mobilizing a “diplomatic offensive” against Iran, noting that he has sent 32 world figures a letter “calling for calling for sanctions to be imposed on the Iranian missile project and that the Islamic Revolutionary Guard Corps be declared a terrorist organization.”

The Israeli military has also signaled its readiness to respond: “Iran will face the consequences for its actions. We will choose our response accordingly,” IDF Chief of General Staff Herzi Halevi said Monday night in a video address.

Yet U.S. officials say a potential Israeli retaliation could be restricted in scope to strikes against Iranian military forces and Iranian-backed proxies outside of Iranian territory, four U.S. officials told NBC News, with three sources adding that Washington does not intend to participate in such an offensive.

CNBC could not independently verify these reports.

“All that is left of “Mr. Security” is a village of ruins from Bari to Kiryat Shmona, and a complete loss of Israeli deterrence,” Israeli opposition leader Yair Lapid said of Netanyahu on social media, according to a Google translation. “It’s election time, now.”

But Ehud Olmert, former Israeli prime minister, told CNBC’s Dan Murphy that the absence of casualties and limited damage resulting from the Saturday attack means Israel may now “act in a quieter and more restrained and more reserved manner to somehow bring to a halt a direct confrontation with Iran.”

He acknowledged that Netanyahu is under strain from right-wing groups within the cabinet that are demanding a very “tough and painful reprisal” against Israel, but stressed “it’d be a mistake to attack Iran now. We defeated Iran on Saturday night.”

He added, “[U.S. President Joe] Biden wants to contain the situation, not to allow it to expand, and we all are in the same page with President Biden.”

The U.S. leader, who previously vowed “ironclad” commitment to Israel, has told Netanyahu that the White House would not join offensive operations against Iran, a senior administration official told NBC News.

World leaders across Europe, Asia-Pacific and the Middle East have widely called for calm, with Saudi Arabia — a now reconciled former foe of Iran — urging “the utmost levels of restraint.”

Iran rained a deluge of drones and missiles on Israel on Saturday night in response to a suspected Israeli strike that killed top Iranian officials in Syria, in a deep escalation of Middle East tensions.

Israel said it identified 300 “threats of various types” and eliminated “99%” of those bound for Israeli soil, according to an update from an Israel Defense Forces spokesperson, Rear Admiral Daniel Hagari. He said a 10-year-old girl was “severely injured by shrapnel” but reported no additional casualties, adding that “several launches” were also made toward Israel from Iraq, Yemen and Lebanon.  

Last night marked the first instance of a direct attack on Israel from Iranian territory. Iran-backed factions – such as Palestinian militant group Hamas, Lebanon’s Hezbollah, Yemeni Houthi and Bashar al-Assad’s Syrian administration – have engaged militarily with the Jewish state.  

Earlier on Saturday, Iran’s Revolutionary Guards had seized a cargo ship in the Strait of Hormuz, claiming a connection to Israel.

Iran’s chief of staff of the armed forces, Major General Mohammad Bagheri, said that Tehran’s operation had now concluded and would involve no further actions, in comments carried by Iran’s state-owned Islamic Republic News Agency.

“At this juncture, the Islamic Republic of Iran has no intention of continuing defensive operations, but if necessary, it will not hesitate to protect its legitimate interests against any new aggression,” Iran’s Foreign Minister Hossein Amir-Abdollahian said on social media on Sunday, according to a Google translation.

Israel and Iran have been on the cusp of direct conflict since the start of Israel’s military campaign in the Gaza Strip, which came in response to Hamas’ terror attack of Oct. 7. Iran vowed revenge after a suspected Israeli strike on an Iranian consulate in Damascus, Syria, on April 1, which killed several top Iranian military commanders.

“We will not be able to comment on the claims regarding a strike in Damascus,” an Israeli foreign ministry spokesperson told CNBC by email, adding, “Iran’s attack on Israel on the night of April 14th is a direct attack on a sovereign nation, its use of proxies for the last decades and the destabilizing effect of the Ayatollah regime in the region and beyond must end.”

Israel’s Ambassador to the U.N., Gilad Erdan, has also called an emergency meeting of the U.N. Security Council and “demanded that they condemn Iran’s attack on Israel and designate the Iranian Revolutionary Guard Corps as a terror organization.”

The European Union has blasted Tehran’s offensive: “The EU strongly condemns the unacceptable Iranian attack against Israel,” EU High Representative Josep Borrell said late Saturday on social media. “This is an unprecedented escalation and a grave threat to regional security.”

U.S. President Joe Biden also denounced the Iranian strike on Saturday as “unprecedented” and asked to convene G7 leaders to “coordinate a united diplomatic response to Iran’s brazen attack,” according to a White House statement.  

“While we have not seen attacks on our forces or facilities today, we will remain vigilant to all threats and will not hesitate to take all necessary action to protect our people,” he added.

Relations between stalwart allies Washington and Israel had appeared to slightly chill in recent weeks, with Biden warning further support would hinge on Israel taking steps to protect civilians and humanitarian aid workers in the Gaza enclave.

But the U.S. – alongside the U.K. and France, according to Israeli military – intervened to mitigate last night’s Iranian attack and the assault could reignite urgency to pass a key $95 billion bill including funding for Israel and Ukraine, which has passed the Senate but stagnated on Republican opposition in the U.S. House of Representatives.

“In light of Iran’s unjustified attack on Israel, the House will move from its previously announced legislative schedule next week to instead consider legislation that supports our ally Israel and holds Iran and its terrorist proxies accountable,” said House leader Steve Scalise on social media.

“Congress must also do its part. The national security supplemental that has waited months for action will provide critical resources to Israel and our own military forces in the region,” Mitch McConnell, Senate Republican leader, said in a statement. “We cannot hope to deter conflict without demonstrating resolve and investing seriously in American strength.”

Oil futures prices are in focus after intermittently swelling in recent months on trade disruptions and delays caused by Red Sea maritime attacks from Yemen’s Houthi, who claim solidarity with the Palestinian people.

Iran is also home to vast oil resources, which it has been largely routing toward China since the U.S. reimposed sanctions during Donald Trump’s administration.

The Iranian currency fell to a record low of 705,000 rials / USD on the unofficial market around 10:30 a.m. local time on Sunday, according to data from foreign exchange monitoring site Bonbast.

The Tel Aviv Stock Exchange’s flagship index, the TA-35, was down 0.38% at 10:23 a.m. London time.

In aviation, several airlines grounded or diverted service through the Middle East, following the Iranian attack. Jordan, Iraq and Lebanon have reopened their airspaces after brief closures on Saturday in the wake of the offensive, Reuters reports.

— CNBC’s Emma Graham contributed to this report

Israel’s gross domestic product shrank by nearly 20% in the fourth quarter of 2023, according to official figures.

The contraction was significantly larger than expected — analysts predicted a contraction of around 10% — and reflects the toll of the country’s war against Hamas in Gaza, now entering its fifth month.

The economic data out Monday “pointed primarily to a contraction in private sector consumption and a deep contraction in investment, especially in real estate,” analysts at Goldman Sachs wrote in a research note.

“The deep GDP contraction occurred despite a strong surge in public sector consumption as well as a positive net trade contribution, with the decline in imports outpacing the decline in exports.”

Official figures showed a 26.9% quarter-on-quarter annualized drop in private consumption, and fixed investment plummeting by nearly 68% as residential construction ground to a halt amid a shortage of both Israel workers due to military mobilization and Palestinian workers as the latter group have been mostly barred from entering Israel since Oct. 7.

Before then, more than 150,000 Palestinian workers from the occupied West Bank entered Israel daily for work in a range of sectors, predominantly in construction and agriculture.

Israel’s GDP contraction “was much worse than had been expected and highlights the extent of the hit from the Hamas attacks and the war in Gaza,” Liam Peach, senior emerging markets economist at London-based Capital Economics, said in an analysis note.

“While a recovery looks set to take hold in Q1, GDP growth over 2024 as a whole now looks likely to post one of its weakest rates on record.”

Israel’s high-tech economy is particularly impacted by the fact that it’s mobilized 300,000 of its men and women as military reservists to deploy in both Gaza and on its northern border with Hezbollah in Lebanon.

The mobilization was triggered by the terror attack of Oct. 7 led by Palestinian militant group Hamas that killed roughly 1,200 people in Israel. Israel’s subsequent offensive against the Gaza strip and relentless bombing campaign has killed more than 28,000 people in the blockaded territory, according to Gaza’s Hamas-run health ministry.

The immediate ban on nearly all Palestinian workers to enter Israel following the Hamas-led terror attack of Oct. 7 has dealt a shock to the Israeli economy, the country’s central bank chief said at the World Economic Forum in Davos.

“We’re working in a very uncertain environment, as you can tell, and I would say there are two types of shocks: there is a supply shock,” Bank of Israel governor Amir Yaron told CNBC’s Dan Murphy. “And it’s primarily in the construction industry where … a third of that industry is Palestinians from the West Bank, and now they’re not coming in to work.”

“It’s also affecting agriculture, where they are in, and there are other foreign workers,” Yaron said. “So that will take a little bit, that’s a negative supply shock, and it could affect prices going up towards the second half of the year.”

He said that the bank must monitor these price developments, adding, “On the other hand, we’ve seen negative demand shock, obviously in a war. And so far that negative demand shock has been the most dominant one. And we will have to monitor that as well, as we go forward with how we are thinking about continuing with monetary policy.”

Before Oct. 7, more than 150,000 Palestinian workers from the occupied West Bank entered Israel daily for work in a range of sectors, predominantly in construction and agriculture.

The ban on most of these workers returning to their employment in Israel has dramatically hurt the economy of the West Bank. It has also contributed to anger and rising unrest over Israel’s decades-long occupation and its relentless bombardment of the Gaza Strip, which Palestinian health authorities say has killed more than 24,000 people. The Israeli offensive began after Hamas militants from Gaza launched a surprise attack on southern Israel that killed some 1,200 people and took another 240 hostage, of which 136 people remain in captivity.

In late December, Israel’s finance ministry warned that the ban on Palestinian workers could cost Israel’s economy billions of shekels per month.

“We calculated what the economic damage would be if Palestinians do not go to work…and it is estimated at approximately NIS 3 billion ($830 million) per month,” a representative of the finance ministry told Israel’s parliament, the Knesset, at the time, according to local media.

Business and factory owners in December pressured lawmakers to allow between 8,000 and 10,000 Palestinian workers to return to their jobs in Israeli settlements and businesses in the West Bank.

In comments reported by the Times of Israel, Raul Sargo, president of the Israel Builders Association, had told the Knesset: “We are in very dire straits … The industry is at a complete standstill and is only 30% productive. Fifty percent of the sites are closed and there is an impact on Israel’s economy and the housing market.”

Israel’s agriculture sector is also heavily dependent on foreign labor, in particular workers from Thailand — at least 10,000 of whom have left the country after the October attack, during which many Thai farm workers were killed and taken hostage.

Asked about what tools the bank has at its disposal to respond to a potential expansion of the war to Israel’s northern border with Lebanon, Yaron stressed the focus on preventing financial instability.

“We all hope it doesn’t happen. In case it does, then your mindset becomes financial stability,” the banker said. “That means the whole view on interest rate process … expansionary monetary policy probably stops, and you use the types of tools we’ve used so far, like the FX or things like that, and we hope we don’t need to go there.”

Yaron added that he was optimistic about his country’s ability to deal with shocks, given its familiarity with wars over the decades.

“I think we still have to remember, Israel is a dynamic economy,” he said. “It’s resilient, it has shown it can bounce back … pretty much over every military event, it has shown that it can come back and grow fast. I would say, actually, Homeland Security, economics has demand for that has grown. And hopefully, if there is a day after in which there’s a better environment with moderate states, those will bring in also new opportunities.”

The U.N.’s highest court is on Thursday hearing South Africa’s accusations of genocide by Israel in its ongoing war in the Gaza Strip.  

The South African government submitted its case to the International Court of Justice, also called the World Court of Hague, on Dec. 29 — nearly three months into a devastating Israeli offensive in the Gaza enclave, which follows the Oct. 7 terror attacks of Palestinian militant group Hamas.

The Israeli offensive has claimed over 23,000 lives in Gaza to date, according to the latest figures from the Palestinian ministry of health.

In its 84-page written filing, South Africa says it “seeks an expedited hearing” and is “making the present application to establish Israel’s responsibility for violations of the Genocide Convention; to hold it fully accountable under international law for those violations; and — most immediately — to have recourse to this Court to ensure the urgent and fullest possible protection for Palestinians in Gaza who remain at grave and immediate risk of continuing and further acts of genocide.”

Israel has dismissed the suit as “blood libel” — a term that describes false and antisemitic accusations of bloodletting levied against Jewish people. Israel is scheduled to respond to the allegations at the ICJ on Friday.

Critics of Israel’s Gaza Strip campaign have questioned the proportionality of its response and the number of civilian casualties as a result of the siege. Israel maintains that it is at war with Hamas, rather than the Palestinian people. It accuses Hamas of weaponizing the civilian population as human shields and deliberately locating its spiderweb of underground tunnels under non-combatant sites in the Gaza territories, such as hospitals and schools.

Belgian Deputy Prime Minister Petra De Sutter on Tuesday telegraphed intentions for her country to echo South Africa’s position.

“I want Belgium to take action at the International Court of Justice, following the lead of South Africa,” she said on social media, pledging to propose this measure with the Belgian government. “Belgium cannot stand by and watch the immense human suffering in Gaza. We must act against the threat of genocide.”

The U.K. has also signaled concerns over the Israeli campaign: “Am I worried that Israel have … has taken action that might be in breach of international law, because this particular premise has been bombed, or whatever … yes, of course I am worried about that,” U.K. Foreign Minister David Cameron said Tuesday.

Ahead of Thursday’s proceedings, Israeli Prime Minister Benjamin Netanyahu once more laid out his country’s aims in the Gaza Strip:

“Israel has no intention of permanently occupying Gaza or displacing its civilian population,” Netanyahu said in a video address released by his office. “Israel is fighting Hamas terrorists, not the Palestinian population, and we are doing so in full compliance with international law.”

He added that once the goals of the Israeli Defense Force offensive against Hamas had been achieved, “Gaza can be demilitarized and deradicalized, therefore creating a possibility of a better future for Israel and Palestinians alike.”

ICJ rulings are “binding upon the parties concerned,” final and hold no right of appeal. While the court lacks the means to directly enforce its decisions, its rulings can deal sharp reputational blows.  

The suit comes as fears have risen over Israel’s long-term intentions to potentially occupy the Gaza Strip following its offensive, with Reuters reporting calls from far-right Israeli Finance Minister Bezalel Smotrich for Palestinians to leave the enclave for elsewhere.  

Israel’s close ally Washington, whose Security Council Spokesperson John Kirby condemned the South African lawsuit as  “meritless, counterproductive, and completely without any basis in fact whatsoever,” has previously rejected a potential Israeli occupation of the Gaza Strip.  

The Israel-Hamas conflict has increasingly seeped into international communities, spilling into protests, a rise in antisemitism worldwide and a nascent Red Sea crisis following the involvement of Yemeni Houthi militants, which share Iranian backing with Hamas.

A hacking group widely reported as being linked to Israel has taken responsibility for a cyberattack that’s knocked out the majority of gas stations across Iran, leading to long lines of cars and angry crowds.

Iranian state TV cited the country’s Oil Minister Javad Owji saying that outside interference was a possible cause after 70% of Iran’s gas stations were hit by service disruptions, according to Reuters.

A group called Gonjeshke Darande, or Predatory Sparrow, claimed it was behind the attack in a post on the social media site X.

“We, Gonjeshke Darande, carried out another cyberattack today, taking out a majority of the gas pumps throughout Iran. This cyberattack comes in response to the aggression of the Islamic Republic and its proxies in the region,” the post read.

Addressing Iran’s leader Ayatollah Ali Khamenei, the group added: “Khamenei, playing with fire has a price.”

Gonjeshke Darande has claimed responsibility for previous cyberattacks on Iran, including one on Iran’s major steel companies.

Iran’s civil defense agency said an investigation was underway and that it was still examining all possible causes for the disruption. Israeli media has covered the alleged attack, but Israel’s government has not commented on it.

U.N. chief António Guterres invoked a rarely exercised clause in the U.N. Charter to push for an Israel-Hamas cease-fire, warning the organization’s security council that urgent action is necessary to help Gaza avert a “humanitarian catastrophe.”

In a dramatic move, Guterres on Wednesday wrote to members of the Security Council and urged them to collectively call for a full humanitarian cease-fire.

He said that two months of war had “created appalling human suffering, physical destruction and collective trauma across Israel and the Occupied Palestinian Territory.”

“The international community has a responsibility to use all its influence to prevent further escalation and end this crisis. I urge the members of the Security Council to press to avert a humanitarian catastrophe,” Guterres said.

“This is urgent. The civilian population must be spared from greater harm. With a humanitarian ceasefire, the means of survival can be restored, and humanitarian assistance can be delivered in a safe and timely manner across the Gaza Strip.”

It is the first time that Guterres has invoked Article 99 of the U.N. Charter, which states that the U.N. chief “may bring to the attention of the Security Council any matter which in his opinion may threaten the maintenance of international peace and security.”

The move renewed personal tensions between Guterres and Israeli officials. Israeli Foreign Minister Eli Cohen on Wednesday said the U.N. chief’s tenure was “a danger to world peace” and suggested his push to activate Article 99 constituted support of the Palestinian militant group Hamas.

A U.N. spokesperson was not immediately available to comment when contacted by CNBC on Thursday. It has previously dismissed claims that it is biased over the Israel-Hamas war.

Late last month, Israel’s representative to the U.N. called for Guterres to resign, saying he had “lost all morality and impartiality.”

The call came after the U.N. chief said it was important to recognize the Oct. 7 attacks by Hamas “did not happen in a vacuum,” citing “56 years of suffocating occupation” suffered by the Palestinian people.

U.N. Spokesperson Stéphane Dujarric described Article 99 as “the most powerful tool” at the U.N. chief’s disposal, saying that Guterres had invoked the article “given the scale of the loss of human life in Gaza and Israel, in such a short amount of time.”

Dujarric added that Guterres hoped the move would ratchet up the pressure on both the council’s 15 members and the international community at large to demand a cease-fire.

The Security Council, which consists of five permanent members with veto power and 10 non-permanent members, has not yet adopted a resolution calling for a cease-fire between Israel and Hamas.

China, France, Russia, the U.K. and the U.S. all hold veto power on the council, which is regarded as the U.N.’s most powerful body.

The U.S. used that veto power on an Oct. 18 resolution that called for “humanitarian pauses” in the fighting to deliver aid to Gaza.

In mid-November, the council passed a resolution to call for “urgent and extended humanitarian pauses.”

War-battered Gaza’s already fragile economy lies in ruins, much like its buildings, following more than a month of bombings by Israel after Hamas militants attacked the country in October.

Even before the war, a majority of Gazans had limited access to affordable, nutritious provisions and were deemed food insecure, according to the United Nations World Food Programme, but the situation has now turned dire. About 80% of Gaza residents were reliant on some sort of international aid before the latest escalation.

“Gaza’s economy is 100% dependent on two sources of revenue: foreign aid and access to Israel’s labor market. The latter is now gone, probably forever. The only thing remaining is foreign aid,” Marko Papic, partner and chief strategist at Clocktower Group, told CNBC via email.

Gaza’s unemployment rate, which has traditionally been one of the world’s highest at above 40%, now stands near 100%, with the enclave’s economy effectively “ceasing activity” indefinitely, according to a  report from the Ramallah, West Bank-based Palestine Economic Policy Research Institute.

Over one month into the war, Gazans have lost at least 182,000 jobs, or 61% of the workforce, according to the International Labor Organization. Another U.N. agency, the United Nations Development Programme, has forecast that Gaza’s development would be set back by 16 to 19 years in its assessment based on economic, health and educational indicators.

On Oct. 7, Hamas militants launched a multi-pronged attack by land, sea and air and infiltrated Israel, killing approximately 1,200 people. In retaliation, Israel launched air strikes and a ground invasion into the Gaza Strip, which has so far killed more than 14,500 people in the enclave.

“Even though the Israelis had occupied Gaza starting 1967 well into the 80s, the economy was doing a bit better, but mostly it was doing well, based on having a number of educated people who went outside of Gaza,” said Kevin Klowden, chief global strategist at Santa Monica, California-headquartered think tank Milken Institute.

Gaza was under the control of Egypt from 1948 until mid-1967 before Israel seized it along with the West Bank following its victory in the Six-Day War against a coalition of Arab countries.

“In the first 25 years of [Israeli] occupation, Gaza had both people working inside Israel [and] it had its own local economy … it was an important part of the Palestinian economy,” Raja Khalidi, director-general of the Palestine Economic Policy Research Institute told CNBC via telephone.

Gazans were able to work in Israel, Egypt, the Gulf and other places 50 years back, and there was a strong professional class, university and airport at the time, but with the current conflict the enclave’s economy now is dire, almost nonfunctional, Klowden also said.

Israel had issued about 18,000 permits for Gazans to work and live in the country and its settlements in the West Bank, but they were revoked after the Oct. 7 attack.

According to the United Nations, during the 1970s and 1980s, the Palestinian economy saw relatively strong capital inflows, largely due to remittances from Palestinian workers in Israel and the Gulf countries. 

Things changed after Hamas gained power in Gaza in 2006 when Israel relinquished its control of the enclave. Hamas has not held an election in Gaza since.

Not only did the Palestinians lose out on working in Israel after Hamas took over Gaza, their trade with the Egyptians also dissipated as Egypt views Hamas as a threat, with investments into the Palestinian Authority-governed West Bank no longer flowing into Gaza, Klowden said.

Since 2007, Gaza has been surrounded by concrete walls and barbed wire fences after Israel imposed an air, land and sea blockade on the Gaza Strip, saying the move was necessary to safeguard itself from Hamas’ attacks. The U.N. classifies Israel as an occupier state over the Palestinian territories of the West Bank and Gaza.

“When people ask me what does it take for Gaza to get back to where it was … We want to go back to where it was 20 years ago, not where it was two months ago,” said Khalidi.

The blockade and repeated wars with Israel since 2008 have hollowed out the enclave’s economy, with its anemic economic growth falling far behind that of the West Bank over the last 15 years, according to the International Monetary Fund. 

“It’s not been a situation where there’s been economic hope. And for the last 15 years, essentially, that’s been the situation,” Klowden said. “You have a very young population that doesn’t see hope out of that. It’s very hard to see an economic future out of that.”

As many as 65% of the 2.3 million Palestinians living in the 140-square-mile sliver of land, between Israel and Egypt are under the age of 24.

“Ultimately, some form of a deal to end the conflict will have to be put in place,” said Clocktower Group’s Papic.

“But that deal is likely to have to see Gulf Arab monarchies and Saudi Arabia footing much of the bill for the viability of Gaza in the future.”

Airlines have seen a drop in bookings in the weeks following the start of Israel’s war against Hamas in the Gaza Strip, and some expect it to cut into their future profits.

According to travel analytics firm ForwardKeys, international flight bookings were 20% below 2019 levels in the three weeks following the attack by the Palestinian militant group Hamas against Israel on Oct. 7, and 5 percentage points below the period of three weeks prior to the attack.

The terrorist attack killed some 1,200 people and saw a further roughly 240 taken hostage, triggering the most ferocious Israeli response that the region has ever seen. Israel’s aerial bombing campaign and subsequent ground offensive in Gaza has killed more than 11,000 people, according to health authorities there.

In the days following the attack, major airlines suspended or reduced flights to Israel’s Ben Gurion Airport in Tel Aviv. But air travel demand to and from other countries and regions was noticeably affected, too.

In the three week period before Oct. 7, ticket issuance from the Middle East was just 3% below 2019 levels, according to ForwardKeys data, illustrating the steady recovery of the sector from the Covid-19 pandemic. In the three week period after Oct. 7, by contrast, ticket issuance from the Middle East was 12% lower than 2019 levels, marking a difference of 9 percentage points.

But the biggest drop in terms of international departures was in flight ticket issuance from the Americas, which was actually up 6% from 2019 levels in the three weeks before the attack, and fell to 4% below those levels in the three weeks after, totaling a drop of 10 percentage points.

International arrivals to the Middle East meanwhile plunged by 26 percentage points in that time frame, with the biggest drops by country being Israel, followed by Saudi Arabia, Jordan, and Lebanon. ForwardKeys draws its data from the International Air Transport Association’s industry-wide ticketing database which includes major international carriers, but does not include budget airlines like easyJet or Ryanair.

Stateside, at least one major airline made a profit warning concerning the war.

United Airlines in mid-October said that pricier jet fuel and a halt to its Tel Aviv flights due the Israel-Hamas war would eat into its profits in the last three months of the year. United had more service to Israel than any of the U.S.-based airlines with links from Washington, D.C.; Newark, New Jersey; and San Francisco, accounting for 2% of its capacity.

The fourth-quarter guidance for United was “bleak and worse than our estimates,” Helane Becker, an airline analyst at TD Cowen, wrote in a note following the carrier’s earnings estimate. “Given the projections that this will be a long war we are looking at the lower end of the forecast range and assuming no service by year end.”

The United Arab Emirates’ national airline, Abu Dhabi-based Etihad Airways, continues flying to Israel. It began flying its Abu Dhabi-Tel Aviv route in April of 2021, roughly eight months after the signing of the Abraham Accords, which normalized relations between Israel and the UAE.

“It’s impacting,” Etihad CEO Antonoaldo Neves said of the Israel-Hamas war, speaking to CNBC’s Dan Murphy at the Dubai Airshow on Monday. “Our demand to Israel is still there. But it’s not as big as it was in the past.”

“We keep flying, very safe. I follow up every day, every day. And we just hope it gets over soon. For the sake of everyone involved in this conflict.”

“I’ll not tell you it’s not impacting … And when things are back to normal, I’m sure that everyone’s going to remember that Etihad was not driven only by profits,” Neves said.

“We have our obligation as a transportation company, to be there when we make money and when we make less money. So that’s the approach we take, as long as it’s safe, we’re going to keep flying.”

Dubai’s flagship Emirates Airline, meanwhile, was optimistic about future demand.

“As far as the business is concerned — look, we have been in a part of the world that has seen for the last 35 years a lot of geopolitical issues,” Tim Clark, president of Emirates Airline, told CNBC.

“I won’t be smug and say we’re impervious to issues, because this is a really difficult issue for the Middle East to deal with.”

“But as far as our bookings are concerned, they remain robust,” he said. “We will always get what we call a certain flakiness in the Asian markets where, you know, they get a little bit concerned … But generally, so far, so good, we’re looking very strong.”

Clark pointed to upcoming events that will bring visitors to Dubai like the COP28 climate summit in early December as well as Christmas and New Year.

In a demonstration of its long-term optimism, Emirates Airline on Monday kicked off the first major deal of the 2023 Dubai Airshow with an order for 95 Boeing aircraft at a value of $52 billion.

“A lot of other things are going on in Dubai and Dubai itself is hugely potent city now, global metropolis, which is bringing in business,” he said.

“So with all of that, notwithstanding the difficulties of the Middle East at the moment, I think we will be okay.”

— CNBC’s Leslie Josephs contributed to this report.

The World Trade Organization’s director-general warned that the ongoing Israel-Hamas conflict will impact global growth if it spills over to the wider Middle East region.

In an interview with CNBC aired on Monday, Ngozi Okonjo-Iweala said: “If it spreads beyond where it is now, to the rest of the Middle East, there will be an impact.”

“Remember that this region is also the source of a lot of the world’s energy with respect to natural gas as well as oil, which is still very much in use and all over the world. So you will see an impact on global growth, on global trade,” she added.

“We do hope it does not amount to that. We’re praying for de-escalation and peace,” she told CNBC’s Martin Soong on the sidelines of the Group of 7 meeting in Osaka, Japan.

Israel’s military campaign in the Gaza Strip was triggered by the brutal terrorist attack by Hamas militants in southern Israel on Oct. 7 that killed 1,400 people, including Americans. Nearly 240 people have been captured and taken as hostages to Gaza.

Economists have cautioned that any possible escalation of the Israel-Hamas war poses a major disruption to the global economy, and could drive up energy prices and disrupt key trade routes.

Trade growth is already “quite grim” due to the “fall in aggregate demand across the board,” said Okonjo-Iweala.

The WTO cut its trade growth forecast for 2023 amid a global manufacturing slowdown. In October, the organization scaled back on growth estimates in global merchandize trade for this year due to a continued slump that started in the fourth quarter of 2022.

Global merchandize trade volume is now projected to grow by 0.8% this year, less than half of the 1.7% increase forecasted in April. The 3.3% growth projected for 2024 remains nearly unchanged from the previous estimate.

“The rebound from China has not been as robust after the pandemic as we hoped. We have the real estate crisis in China. European Union growth is slower than we had also hoped,” said the WTO director-general.

“The U.S. seems to be doing okay but still, there’s the issue of aggregate demand falling across the board in most regions and both sectors and persistent inflation with interest rates going up higher for long,” she added.