Oil prices soared over 3% early Wednesday in the wake of a devastating blast at a hospital in Gaza City that claimed the lives of hundreds of people. The explosion has sparked a blame game between Israel and Hamas, with each side pointing fingers at the other. According to Palestinian officials, the death toll has reached at least 500, intensifying the already dire situation.
As a response to the tragedy, President Joe Biden has delayed his planned visit to Jordan to attend a regional summit on Gaza. Biden, en route to Israel, expressed his commitment to investigating the explosion, stating that his national security team is currently looking into the matter. Upon his arrival in Israel, Biden appeared to support Israel’s claim of innocence regarding the blast, telling Israeli Prime Minister Benjamin Netanyahu, “Based on what I’ve seen, it appears as though it was done by the other team—not you.” However, he also acknowledged that uncertainty remains about who is truly responsible and the challenges that lie ahead in determining the truth: “we’ve got to overcome a lot of things.”
Violence in the Middle East has historically had significant ramifications for the oil market due to the intricate web of relationships between producing countries in the region. While Israel and Jordan do not possess substantial oil reserves, there are concerns that the conflict could escalate and involve Iran, a major oil shipper. Iran currently exports millions of barrels per day. Additionally, neighboring countries like Saudi Arabia, one of the world’s largest crude producers, further contribute to the delicate balance of power and potential economic consequences.
With his visit, President Biden aims to prevent a wider regional conflict while reaffirming his unwavering support for Israel in these trying times.
Oil Prices Surge The surge in oil prices is a direct result of the escalating violence in Gaza. The West Texas Intermediate (WTI), the U.S. standard measure for oil, experienced a 3.2% increase, reaching $89.43 per barrel. Likewise, Brent crude, the international standard, rose by 3% and reached $92.62. Both contracts have recorded an overall increase of more than 7% throughout the past week.
Investors Turn to Gold as Safe-Haven Asset In light of the unrest in the Middle East, investors have begun seeking refuge in gold, pushing its prices higher. During early trading, gold witnessed a 0.9% surge. Over the past week, gold has seen gains of over 3%, solidifying its status as a safe-haven asset during uncertain times.