Due to the unexpected attack on Israel carried out by the militant group Hamas, oil prices have increased while airline stocks declined. On Monday morning, it appeared that investors were factoring in the likelihood of additional instability in the Middle East.
Israeli Prime Minister Benjamin Netanyahu stated that Israel was entering into a “long and challenging conflict” against Hamas. The death toll, which has surpassed 1,100 since the conflict began on Saturday, is anticipated to continue rising. The deadliest attack on Israel in decades drove anxiety across global markets, stock futures fell and haven assets rose.
Fears that the Israel-Hamas conflict would impact other Middle Eastern countries have led to a rise in the price of oil and shares in weapons manufacturers.
Earlier this morning, the price of a barrel of Brent crude, (the benchmark for oil prices) rose by 3.8% – costing around $88 a barrel.
Higher oil prices entail higher costs for gasoline and diesel, as well as higher prices for general economic output, which is dependent on oil. Energy price hikes will drive inflation. Market players are concerned that Iran, an oil exporter, may be taken into the conflict.
Impact on Europe
European energy stocks have risen after Palestinian militants from the armed group Hamas set up a surprise coordinated attack on Israel, causing oil prices to skyrocket. The pattern has been found throughout Europe. Saab, a manufacturer of jet fighters and automobiles, had its share price rise by 9%, while Rheinmetall, a German armaments manufacturer, rose by 5.5%.
Flights to Tel Aviv have been halted by several major US and European carriers, including Delta, United Airlines Holdings, and American Airlines, as well as Air France, Lufthansa, and Wizz Air.
After the shekel plummeted to a near-eight-year low versus the US dollar in early trade, Israel’s central bank intervened to strengthen the currency. The Bank of Israel said that it will sell up to $30 billion in foreign currency on the open market to preserve stability, allowing the shekel to marginally rebound. The currency was already under strain due to a lack of overseas investment after Benjamin Netanyahu’s contentious plan to give Israel’s parliament the authority to override its top court.
The situation remains fluid and complex, with the potential for further escalation and international involvement. As events continue to unfold, global markets and policymakers are closely monitoring developments in the region, seeking ways to navigate the challenges posed by the ongoing conflict.