Oil price surges 4% as attack on Israel prompts fears of expanding Middle East violence

Oil prices jumpedand stock markets around the world mostly slumped fterdeadly attacks by Hamas from the Gaza Strip prompted Israel to declare war. The price of a barrel jumped by almost $5 on Monday, mostly on concerns that the volatile situation could ensnare more countries in the Middle East.

Many stock markets are closed Monday, but U.S. exchanges see declines

Pete Evans CBC News Posted: Oct 09, 2023 9:24 AM EDT | Last Updated: October 9, 2023

A woman is shown outside the Tel Aviv Stock Exchange building. — Shares in Tel Aviv sold off heavily after the attack, as did the Israeli currency the shekel. (Rina Castelnuovo/Bloomberg)

Oil prices jumpedand stock markets around the world mostly slumped afterdeadly attacks by Hamas from the Gaza Strip prompted Israel to declare war.

The price of a barrel of West Texas Intermediate oil jumped by almost $5 to more than $86 US a barrel on Monday, mostly on concerns that the volatile situation could ensnare more countries in the region.

Israel is a marginal oil producer, but nearby nations in the Middle East are major suppliers, and if they get involved in the fighting, global supplies will be significantly impacted.

"While oil fundamentals have not changed since these attacks, it does not mean they won't," said Warren Patterson, head of commodities strategy at Dutch bank ING. "There are reports that Iran helped Hamas plan the attacks and gave them the green light. If this is proven to be true, we could see the U.S., an ally of Israel, taking a tougher stance against Iran, which could ultimately lead to a reduction in oil supply."

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The Toronto Stock Exchange was closed for the Thanksgiving holiday on Monday, and most major Asian markets are also closed.But the New York Stock Exchange was open and stocks mostly slumped to start with and rebounding somewhat later in the day. The S&P 500 was 0.6 per centhigher in its first trading since the attack.Trading has been unsteady, with the benchmark index falling as much as 0.6 per centearlier.

Tradersassess geopolitical risk

Shares in weapons makers and military contractors surged: Northrop Grumman and RTX each rose 3.6 per centwhile Lockheed Martin jumped 4.6 per cent.

Shares in travel and leisure companies, such as airlines and cruise ships, tumbled. American, United and Delta suspended service to Israel as the U.S. State Department issued travel advisories for the region, citing potential for terrorism and civil unrest.American Airlines sank 5.6 per cent, and Norwegian Cruse Line fell 4.5 per cent.

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Tel Aviv's main stock benchmark was down 0.4 per cent. It closed 6.5 per centlower Sunday, after the attacks. Early Monday, Israel's Central Bank said it will sell up to $30 billion US in foreign exchange to prop up the shekel, which fell to a near 8-year low.

Edward Moya, an analyst with foreign exchange firm Oanda, said:"It was supposed to be a quiet Monday morning given the Columbus Day holiday," but following the unexpectedHamas attack, "traders are struggling to assess how this latest geopolitical risk will unfold and potentially impact inflation and growth trends."

With files from The Associated Press

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Oil price surges 4% as attack on Israel prompts fears of expanding Middle East violence

Many stock markets are closed Monday, but U.S. exchanges see declines

Tradersassess geopolitical risk

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