Iran, on Saturday, attacked Israel when it launched more than 300 drones and missiles towards its foe. It is Tehran’s first direct military attack from within the country’s territories.
The Israeli Defense Forces repelled most projectiles with assistance from the US, France, Jordan and the United Kingdom. Five projectiles landed within Israel’s borders, with one wounding a 7-year-old girl.
As the war in the Middle East escalates, already high oil prices are expected to rise further when markets open on Monday.
The attack was a retaliation for a suspected Israeli airstrike this month on an Iranian consular building in Syria that killed three Iranian generals and four officers.
Western nations condemned the attack, while President Joe Biden told Israeli Prime Minister Benjamin Netanyahu that the US will not participate in a retaliatory military action on Iran.
The international community, including the G7 countries, condemned Iran’s actions.
The war and the markets
Traders and investors are likely to respond to the increased geopolitical risks, potentially driving up gold and oil prices while lowering stocks and government bond yields.
Economical uncertainty
Increased prices for oil have severe consequences; it can stall America’s economic recovery as it is inflationary. (Higher gas prices mean more expensive goods and services to compensate for the hike.)
Oil prices have already been climbing after the OPEC+ nations decided to cut supply. The war in Ukraine also hiked prices. This year has seen a nearly 20% increase in oil prices.