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28 Oct, 2023 08:40

Oil prices spike amid Israel incursion

The IDF has said it is broadening its ground operations in Gaza
Oil prices spike amid Israel incursion

Oil and metals markets reacted strongly on Friday to news from the Middle East, where Israel Defense Forces (IDF) announced they were “expanding ground operations” in Gaza.

Oil prices climbed nearly 3% to a one-week high amid fears that the conflict between Israel and Palestine could spread to the broader Middle East, a crucial supplier of energy and a key oil shipping passageway. Global benchmark Brent futures rose $2.51, or 2.85%, to settle at $90.44 a barrel. The US benchmark West Texas Intermediate (WTI) crude spiked $1.95, or 2.3%, to settle at $85.16 a barrel.

According to an earlier projection by Bloomberg Economics, oil prices could reach $150 per barrel if Iran joins the conflict.

Meanwhile, gold topped $2,000 an ounce for the first time since May as investors started stocking up on the haven asset, a traditional move in times of economic or geopolitical instability. Gold futures for December settled Friday’s official trading session at $1998.50 an ounce, but surged in post-settlement trade to $2,017.85, up $20.45, or 1.02%, on the day.

We’re seeing this spike as Israel moves into Gaza, and there’s now a growing risk this might become a broader conflict,” Bart Melek, managing director and head of commodity strategy at TD Bank, told Bloomberg.

Gold has rallied approximately 9% since the Israel-Palestine conflict escalated after a surprise attack by Palestinian armed group Hamas on Israel on October 7. Experts and traders warn that the uncertainty in the region will continue driving bullion prices higher.

Silver, another wealth preservation asset, also edged higher on Friday, with futures for December delivery closing at $23.24, up 1.47%. The precious metal has rallied roughly 10% since October 7.

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