Oil inches near $90 amid conflict
Key for markets is whether the conflict remains contained or spreads to involve other regions, particularly Saudi Arabia
Daily TribuneKey for markets is whether the conflict remains contained or spreads to involve other regions, particularly Saudi Arabia
People fill up their cars with gasoline at a petrol station in the occupied West Bank city of Hebron amid rising uncertainty. Palestinian militants have begun a ‘war’ against Israel, the country’s defense minister said on 7 October after a barrage of rockets were fired and fighters from the Palestinian enclave infiltrated Israel, a major escalation in the Israeli-Palestinian conflict. | HAZEM BADER/Agence France-Presse
Global oil prices soared more than 4 percent on Monday after Hamas launched an attack on Israel at the weekend, sparking concerns about possible supply shocks from the crude-rich region.
Brent jumped 4.7 percent to $86.65 and West Texas Intermediate was up 4.5 percent at $88.39 in early Asian business.
"The Philippine shares index opened the week slightly lower as investors geared up for a fresh batch of economic data. Oil prices surged on the back of concerns about supply cuts," Regina Capital Development Corp. managing director Luis Limlingan said.
The surprise attack and Israel's declaration of war in response to it have left more than 1,000 dead and raised concerns that a potential broadening of the conflict could draw in the United States and Iran.
"Key for markets is whether the conflict remains contained or spreads to involve other regions, particularly Saudi Arabia," ANZ Group's Brian Martin and Daniel Hynes said.
"Initially at least, it seems markets will assume the situation will remain limited in scope, duration, and oil-price consequences. But higher volatility can be expected."
The crisis comes as oil prices were already elevated on supply concerns caused by output cuts by Russia and Saudi Arabia, fueling fresh worries about global inflation.
The crisis fanned concerns about supplies of crude from the region at a time when supply worries are already high owing to Saudi Arabia and Russia's output cuts.
It has also renewed fears about the impact on inflation, with energy costs a key driver of spiking prices, giving a fresh headache to central banks as they try to ease up on interest rate hikes to avoid recessions.
Markets anxious
The surprise attack and Israel's declaration of war in response to it have left more than 1,000 dead and raised concerns that a potential broadening of the conflict could draw in the United States and Iran.
"Key for markets is whether the conflict remains contained or spreads to involve other regions, particularly Saudi Arabia," said ANZ Group's Brian Martin and Daniel Hynes.
"Initially at least, it seems markets will assume the situation will remain limited in scope, duration, and oil-price consequences. But higher volatility can be expected."
Both main contracts surged more than five percent in early Asian business before easing back as the day wore on.
However, SPI Asset Management's Stephen Innes warned: "Historical analysis suggests that oil prices tend to experience sustained gains after the Middle East crises."
"Meanwhile, stocks tend to eventually recover and trend higher after an initial period of volatility. Safe-haven assets like gold and Treasurys, which initially see gains during such crises, tend to fade from their initial price spikes as the situation stabilizes."
"But with Middle East analysts considering this to be a pivotal moment for Israel, the view looks incendiary in any current scenario."
A decidedly risk-off mood also saw investors push into the safety of the dollar, which was up against the pound and euro, as well as the Australian and New Zealand dollars.
The yen, considered one of the safest currencies, strengthened against the greenback, though it remains locked around 11-month lows.
Gold, another key haven, gained more than one percent.
Equity markets were mixed, with Shanghai dropping on its first day back after a week-long holiday as investors continue to fret over the stuttering Chinese economy.
There were also losses in Mumbai, Singapore, Manila, Bangkok and Wellington, though Hong Kong rose as it opened in the afternoon, having been closed in the morning owing to a typhoon.
Sydney and Jakarta eked out gains. Tokyo was closed for a holiday.
London edged up at the open while Paris and Frankfurt were lower.
The tepid performance came despite a rally on Wall Street, where traders welcomed data showing a forecast-busting jump in new jobs but wage growth slowing.
The "Goldilocks" figures — neither too strong nor too weak — lifted optimism the world's top economy can avoid a recession even as the Federal Reserve keeps rates elevated.
Still, there are worries the bank will hike one more time before the end of the year, with officials determined to bring inflation to heel and keep it at their two percent target.
with AFP
