Business

Oil and gold prices rise as US says Israel has struck Iran

Legend, Iran is the world’s seventh largest oil producer

  • Author, Mariko Oi
  • Role, Economic journalist

Oil and gold prices jumped after U.S. officials said an Israeli missile struck Iran.

Brent crude, the international benchmark, soared to more than $90 a barrel after reports of an Israeli attack emerged, before falling again when Iran sought to downplay its significance.

Gold briefly approached a record high before settling below $2,400 an ounce.

There are fears that a worsening conflict in the Middle East could disrupt oil supplies.

Investors have been closely following Israel’s response to the direct Iranian drone and missile attack last weekend.

Oil prices initially jumped 3.5%. But Brent then fell to $87 a barrel after Iranian state media said there was “no damage” in Isfahan province, where explosions had been reported.

Sudden and sustained increases in oil prices risk fueling inflation. Countries rely heavily on this product, which is used to produce fuels such as gasoline and diesel.

Fuel and energy prices have been one of the main factors responsible for the rising cost of living around the world over the past two years.

Randeep Somel, fund manager at M&G Investment Management, told the BBC’s Today programme: “The markets’ concern would mainly be inflationary, because it would actually add to inflation.”

Although the pace of inflation is slowing, in the UK it remains above the Bank of England’s 2% target and some economists predict an interest rate cut may not happen before summer or later in the year.

“In the UK, the inflation rate is still around 3.2% – still far from target – and this is becoming a concern for policymakers,” Mr Somel said.

“It is good to see that the situation has not yet worsened and that market disruptions will hopefully be short-lived.”

The price of Brent is well below the highs reached after Russia’s invasion of Ukraine in February 2022, when a number of major economies imposed sanctions on the oil-producing country.

Oil reached $125 a barrel in the weeks that followed, leading to a prolonged period of rising household energy bills.

The price of gold often rises during times of uncertainty because it is considered a safe investment.

Heightened tension in the Middle East has raised concerns over whether shipping through the Strait of Hormuz between Oman and Iran would be affected.

It is a crucial shipping route, as it passes approximately 20% of the planet’s total oil supply.

Members of the Opec cartel of oil producers – Saudi Arabia, Iran, the United Arab Emirates, Kuwait and Iraq – send most of the oil they export through the strait.

Iran is the world’s seventh-largest oil producer, according to the U.S. Energy Information Administration, and the third-largest member of OPEC.

The initial surge in oil prices was “a knee-jerk reaction to fears of a further escalation of the war between Israel and Iran,” said Vandana Hari, an energy market expert at Vanda Insights.

“What the latest events underline is the increased fragility and volatility of the situation in the Middle East,” she added.

Stock markets fell as investors reacted to the latest events. In the UK, the FTSE 100 stock index fell 0.5% while the FTSE 250 fell 0.8% in early trading.

In Asia, Japan’s Nikkei 225 index fell 2.7%, while Hong Kong’s Hang Seng fell 0.9%. South Korea’s Kospi closed down 1.6%.

News Source : www.bbc.com
Gn bussni

Sara Adm

Aimant les mots, Sara Smith a commencé à écrire dès son plus jeune âge. En tant qu'éditeur en chef de son journal scolaire, il met en valeur ses compétences en racontant des récits impactants. Smith a ensuite étudié le journalisme à l'université Columbia, où il est diplômé en tête de sa classe.Après avoir étudié au New York Times, Sara décroche un poste de journaliste de nouvelles. Depuis dix ans, il a couvert des événements majeurs tels que les élections présidentielles et les catastrophes naturelles. Il a été acclamé pour sa capacité à créer des récits captivants qui capturent l'expérience humaine.
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