WASHINGTON, July 14: The Israeli military offensive into Gaza and Lebanon may increase anti-American feelings in the Middle East and the Islamic world but Washington does not see it leading to an all-out Arab-Israel war.

Officials in Washington, talking privately to reporters, have acknowledged that Israeli incursions have once again fuelled the hatred between the Jewish nation and the Arab world. They also acknowledged that this hatred would further undermine US efforts to win the ‘war on terror’ by winning over ‘hearts and minds’ of Arab and Muslim masses, as President Bush once said.

Some media reports, however, noted continued Israeli military actions – particularly the death of over 60 civilians in Lebanon – have escalated the fears of war. They pointed out that the swift Israeli reprisal to the kidnapping of its soldiers was matched by an equally swift Hezbollah rocket attack into Israel.

Although Israel has warned that its military offensives in Lebanon and Gaza will run for some time, US officials appearing on various television channels said they do not see it leading to an all-out war.

They feel that ultimately the stand-off will end with some kind of agreement to return the three captured Israeli soldiers in exchange for a release of a number of prisoners. In Gaza, Israel will also want to ensure that the Qassam rockets which are frequently fired into southern Israel are halted as part of this operation. Israel has ruled out direct negotiations, but has not publicly excluded indirect talks through outside mediators.

The first major impact of the conflict, however, was on the oil market where crude oil rose to an unprecedented $78 a barrel on Friday morning and was set to move higher.

The Middle East collectively pumps nearly a third of the world’s oil output, and if tensions continue to grow the prices are certain to continue to increase.