Oil prices surged initially following reported explosions near the Iranian city of Isfahan, but later eased as tensions in the Middle East calmed. Brent crude fell to $86.8 per barrel, while US crude futures dropped to $82.50 after an early spike.
The situation escalated as Israel conducted a military strike in Iran, raising concerns about potential impacts on oil supply. Global oil prices have already climbed 15% this year due to fears of conflict, OPEC supply cuts, and anticipated growth in Chinese demand.
One of the main fears in the oil market is the possibility of disruptions to shipping through the vital Strait of Hormuz if a broader conflict erupts. Additionally, the US plans to reimpose sanctions on Venezuela’s oil industry, while Mexico intends to reduce exports to meet domestic demand, further adding to supply risks.
In response to the escalating tensions, gold prices surged as investors sought safe-haven assets. Asian stock markets closed significantly lower, while European markets and Israel’s stock index were slightly down following Iran’s limited response to the attack.
S&P Global Ratings recently downgraded Israel’s sovereign credit rating due to increased geopolitical risks stemming from conflicts with Hamas and Iran-backed Hezbollah. Analysts predict that the Israel-Hamas conflict and confrontation with Hezbollah will likely persist throughout 2024.
Overall, the situation in the Middle East continues to impact global markets, with oil prices and geopolitical tensions at the forefront of investors’ concerns. Stay tuned for further developments on ‘The Puck Drop’.
