Global markets are jitters as new geopolitical tensions rise. The Middle East turmoil and the ongoing conflict in Ukraine add pressure to oil pricing and risk sentiment. Though Israel and Palestine are not major oil producers, regional instability can influence Brent crude, Europe’s benchmark, and trigger swings in equity markets. Analysts note that safe-haven assets like the dollar and gold often gain during these episodes.
Crude prices saw a modest rebound in early trading and hovered around 90 dollars a barrel, with sessions closing near 85 according to market tallies. Yet, experts surveyed by Reuters expect the broader market impact of Hamas’ attack on Israel to remain contained. They caution that a lift in risk premia is likely until traders are confident that the region’s oil and gas flows will stay steady and operating normally
Stock markets in the Middle East felt the shock on Sunday. Tel Aviv’s TA-35 dropped 6.47 percent, the steepest decline in three years. The Tadawul index in Riyadh slipped about 1.57 percent, while markets in Qatar and Kuwait also fell. Egypt’s EGX30 declined 2.6 percent after an incident that claimed the life of a police officer and injured others.
Iran’s role
Iran remains a major oil producer in the Middle East and a supporter of Hamas. The Iranian state backs Palestinian militants as well as Hezbollah in Lebanon. If the conflict affects Iran directly, the market repercussions could intensify. Geopolitical crises in the region have a history of pushing oil prices higher and stock prices lower. Reuters noted this assessment, quoting Yardeni Research: everything hinges on whether the crisis stays short term or evolves into a broader confrontation between Israel and Iran.
“Setting human tragedy aside, the market impact of rising violence should be limited in the near term,” stated Guillermo Santos of iCapital in remarks cited by Bloomberg. Still, if tensions widen to other regional giants such as Saudi Arabia, which holds substantial influence in oil markets, a renewed squeeze on crude could feed inflation in Western economies. Central banks might respond with tighter monetary policy for an extended period.
Related news highlights that Saudi Arabia has pursued steps to improve diplomacy with Israel to bolster commerce and regional stability. Similar moves were seen with other Gulf states, including the UAE and Bahrain, after the Abraham Accords in 2020. Meanwhile, other Arab nations such as Sudan and Morocco have signaled recognition of the State of Israel. The renewal of Palestinian-Israeli hostilities signals greater strain in a region already fraught with diplomatic fragility.
“It is possible that Hamas carried out an action designed to provoke a strong Israeli response, a move that complicates leadership choices across the Arab world,” commented a security and defense analyst. The remark highlights the delicate environment governments navigate as they balance security, diplomacy, and regional influence.