As clashes between Israel and the Palestinian Islamist group Hamas fuel worries that the conflict could spread beyond Gaza in terms of oil and gold. Here are the key developments in commodity markets:
- Oil Prices Edge Down: Oil prices edged down slightly on Tuesday after gaining more than 4% in the previous session. Brent crude fell 18 cents, or 0.2%, to $87.97 a barrel, while U.S. West Texas Intermediate crude eased 16 cents, or 0.2%, to $86.22 a barrel. Although Israel produces very little crude oil, concerns arise that an escalation of the conflict could impact Middle East oil supply.
- Gold Prices Surge: Gold prices rose the most since May due to increased haven demand following heightened tensions in the wake of the Hamas attack on Israel. On Monday, the gold price on the Multi Commodity Exchange (MCX) for the December 2023 expiry contract opened higher at ₹57,000 per 10 gm levels and reached an intraday high of ₹57,400 levels within minutes of the commodity market’s opening.
- War Between Israel and Hamas: In a major escalation on October 7, Hamas launched a “surprise attack” on Israel, firing a barrage of rockets into the southern and central parts of the country. The conflict has resulted in as many as 2,300 injuries and over 700 deaths, making it the “worst massacre of Israeli civilians” by Hamas, according to Israel Defence Forces (IDF).
- Ripple Effects on Flights: Major airlines have suspended flights in and out of Israel due to the conflict. Tel Aviv’s Ben Gurion International Airport has experienced numerous flight cancellations and delays, impacting travel.
- What Prompted the Attack: Hamas officials cited long-standing tensions, including a dispute over the sensitive Al-Aqsa Mosque, which is sacred to both Muslims and Jews. Israeli religious nationalists have increased their visits to the compound in recent years. Tensions escalated with recent violent Palestinian protests.
The Israel-Palestine conflict has not only led to tragic human consequences but has also affected commodity markets, reflecting concerns over regional stability and the potential impact on oil supply. The situation remains fluid, with the international community closely monitoring developments in the region.