An Israeli missile launched from the Iron Dome defence missile system attempts to intercept a rocket, fired from the Gaza Strip, over the city of Netivot in southern Israel on October 8, 2023. (Photo by MAHMUD HAMS / AFP)
The attack on Israel over the weekend by Hamas has caused global oil prices to surge by 5%.
According to the BBC, Brent crude rose more than $3 (R58) to $87.68 (R1 703) a barrel, while US prices also rose.
Reuters reported that US West Texas Intermediate crude was at $86.05 (R1671,41) a barrel, up $3.26 (R63,32), or 3.94%.
While Israel and Palestinian are not oil producers, the Middle Eastern region provides about a third of global oil needs.
The main reason for the sharp jump in crude prices is “due to the prospect of a wider conflagration that could spread to nearby major oil producing nations such as Iran and Saudi Arabia,” according to energy analyst Saul Kavonic in an interview with the BBC.
Nigel Green, the CEO of deVere Group said on Monday that investors should avoid “knee-jerk reactions” to the oil price surge.
“The events in this region are now directly impacting financial markets worldwide, which, as ever in times of increased volatility, is immediately prompting some investors into selling off riskier parts of their portfolios, such as stocks and some currencies,” Green said.
“Oil has a disproportionate impact on global financial markets due to its pivotal role in the world economy, its interconnectedness with various sectors, and its potential to influence broader economic conditions and investor sentiment.
“I would urge investors to avoid knee-jerk reactions to the oil price surge and geopolitical tensions that are creating the market turbulence. Investors are likely to profit by sitting still and not selling and then having to buy back at higher prices,” Green concluded.
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