In the wake of deadly attacks by Hamas from the Gaza Strip, oil prices have experienced a rapid surge. This military conflict in the Middle East has caused Brent crude, the international benchmark, to increase by over $3 a barrel, representing more than a 3.6% rise. While Israel has declared war and suffered over 700 casualties, the attacks also threaten oil supplies, despite the country’s lack of oil production. Iran, a major oil producer, has denied involvement in aiding Hamas, despite reports suggesting Iranian security forces were responsible and gave the final go-ahead.
Explaining the potential implications of regional disruptions or escalations, Stephen Innes of SPI Asset Management stated that they could have far-reaching consequences for energy markets, global supply chains, and geopolitical dynamics.
Prior to the outbreak of conflict, oil prices had already risen by $4.18, or 4.9%, reaching $88.76 a barrel.
The FTSE 100, with its energy-heavy composition, is expected to rise upon market opening, while other European markets are predicted to fall due to the higher oil prices resulting from the military conflict in the Middle East.
Investors have also turned to bonds, as well as the safe havens of the Japanese yen and gold, in response to the outbreak of war.
In other news, Hong Kong stocks experienced a rise in the first few minutes of afternoon trading. The Hang Seng Index increased by 0.2%, or 32.54 points, reaching 17,518.52. The Shanghai Composite Index, on the other hand, dipped by 0.4%, or 11.83 points, reaching 3,098.65, as investors returned from a week-long holiday. Similarly, the Shenzhen Composite Index, on China’s second exchange, slightly decreased by 0.1%, or 2.53 points, reaching 1,907.75.
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