Oil and Gold Prices Surge as Conflict in the Middle East Continues
According to local sources, an Israeli airstrike hit a hospital in Gaza on Tuesday, killing approximately 500 Palestinians in a single night. Israel has claimed that the blast was due to munition launched from Palestine. The attack immediately impacted the markets, with safe-havens like gold and oil surging higher in the past 24 hours. In response to the bombing, Iran called for sanctions against Israel, upping the fears of a broader conflict in the Middle East.
Safe-Haven Assets Rise After Hospital Hit in Gaza
Prices of oil and gold climbed on Wednesday as the latest escalation in the Middle East fueled demand for safe-haven assets. Oil and gold have already been on the rise due to the conflict.
The benchmark Brent crude rose nearly 3% on the day to $92.53, while the West Texas Intermediate (WTI) edged 3.1% higher to $89.39. Meanwhile, the bullion added over 1%, climbing to $1.944 per ounce.
The latest upswing in safe-haven assets was likely due to the bombing of a Gaza hospital, which killed roughly 500 Palestinians. Following the attack, Egyptian and Palestinian leaders called off a summit with the US President Joe Biden. The Palestinian Authority’s health minister, Mai Alkaila, said Israel committed “a massacre” at the Al-Ahli al-Arabi Hospital.
Meanwhile, Iranian Foreign Minister Hossein Amirabdollahian urged the Organisation of Islamic Cooperation (OIC) members to impose an oil embargo and other sanctions on Israel and oust all Israeli ambassadors. The OIC is meeting in Saudi Arabia’s city of Jedday to discuss the current situation in the Middle East after the gruesome hospital attack.
“The foreign minister calls for an immediate and complete embargo on Israel by Islamic countries, including oil sanctions, in addition to expelling Israeli ambassadors if relations with the Zionist regime have been established.”– the Iranian foreign ministry said in a statement.
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Risks of Wider Middle Eastern Conflict Growing After Attack on Gaza Hospital
The explosion at a hospital in Gaza on Tuesday night, along with the responses from Iran and members of the OIC, has increased the likelihood of a larger conflict in the Middle East. The attack could potentially lead to the involvement of other global powers, including the United States.
Risks of a broader war in the region would increase the odds of the global economy falling into recession, economists at Bloomberg said earlier this week. Over the weekend, the Israeli military said its forces were preparing for various operational offensive plans and a potential ground invasion of the Gaza Strip.
A few days later, Iran said it is considering taking “pre-emptive measures” against Israel, which has faced growing condemnation for alleged war crimes. In response, the US government warned Iran and the Lebanese militant group Hezbollah to stay out of the war and sent two US Navy carrier battlegroups to the Eastern Mediterranean to back those warnings.
Further escalation and involvement of other countries in the ongoing Middle Eastern clash would also affect the global macroeconomic landscape. Further increases in already-high oil costs could potentially refuel inflation.
Do you think the current war in the Middle East will be resolved or could lead to a broader conflict? Let us know in the comments below.