Report: Israel attacks flotilla, 10 die

How??? I suppose maybe you mean emotionally affected.

How on earth could industry be emotionally affected?
Note that I was talking about events in the middle east over the years and the way they have impacted globally. These events in the middle east impact globally because they hit people and business all round the world right where they notice it hurts.

This... is not really true. There are indeed a lot of strange procedural weirdnesses with Gaza supplies, but for the most part the important stuff gets through.

"for the most part" isn't good enough, the legal obligations are very clear which is why I asked Golden Rivet earlier about the legal status of the territory in question.

From the BBC:

Look at the words, " largely been able to continue to transport basic supplies such as flour and cooking oil", "Israel generally allows medicines into Gaza.", " 15-30% of essential drugs out of stock over 2009"
Any single one of those shows that Israel is failing in its legal obligations, though you could go further and do the UN complaining that their essential humanitarian goods are being stopped, you can go to the ICRC where they complain about essential medicines and spare parts for hospital equipment being blocked, you can go to the WHO and see them complain about malnutrition and vitamin deficiency caused by the blocking of essential humanitarian aid, youcan go to the Israeli courts and see the repeated complaint that despite a ruling that Israel is obliged to supply 60% of the required fuel for electricity generation it consistantly fails to deliver even that.

but in general Israel lets all food and medicine through.

Which is it? in general or all.
If you look around on the link you provided you will see that "in general" doesn't make the grade and "all" isn't even on the bill.

Oh, and here is the offer Israel's navy made to the activists before boarding:

So what? Firstly they were still in international waters, secondly the whole rationale behind the protest(apart from the crazy nuts) is that Israels standing offer to ship goods falls very short of what is required.

I'm actually with you on this, I don't think this blockade will accomplish Israel's goals.

Oh dear, you have just weakened Israels case if it by some chance had waited until the ships were within its jurisdiction.

Embargo and blockade are not the same thing,

I know, but many have been playing mix and match to try and justify the actions.
Bibi did it just yesterday with an entirely different embargo, blockade, two resolutions and three bi-laterals which he portrayed as not only one single thing but also portrayed as the same as this current episode.

and the mechanism you outline makes the tactic of a naval blockade completely pointless.

It all depends on the legal status of any actions, which comes back again and again to the limits of jurisdiction which may possibly be applied in this case which are the territorial waters and contiguous zone, plus of course the legal status of the both Israel and the territory in question, not forgetting the legal obligations Israel carries which affect the legality of its customs actions(which in effect is what this "blockade" really is).
To which you must add the practicalities and effeciveness(which also affect the legal issues).

As I have said, the middle east is a very complex mess, this incident alone is chock full of little pitfalls which completely change the game, anyone taking the ridiculous interchangable Israel/arab good/bad approach is in effect just showing their blind hatred for one side or the other and lack of rational thought.