Middle East Tensions Spike Oil Prices, Drive Investors to Gold and Bonds

Sydney.  Rising military tensions in the Middle East caused a sharp increase in global crude oil prices on Monday, while investors were drawn to safe-haven assets like gold and bonds. This escalation, coming amid existing market apprehension due to Artificial Intelligence (AI) and banking sector fears, has created further pressure.

Brent crude oil prices in the international market rose by 9 percent to $79.42 per barrel, while US crude oil increased by 8.6 percent to $72.61. Similarly, the price of gold increased by 1.4 percent to $5,350 per ounce.

The risk of neighboring countries being drawn into the conflict has increased as signs of de-escalation in the military attacks by the US and Israel on Iran have not materialized, and Iran has responded by launching missiles across the region. US President Donald Trump indicated that this conflict could last for another four weeks and that attacks would not stop until American objectives are met.

Meanwhile, attention has focused on the Strait of Hormuz, which accounts for one-fifth of the world's total oil trade. Although the waterway has not been completely closed, tankers have been stranded due to fears of attack and a lack of insurance coverage.

According to market analysts, the disruption of shipping through Hormuz has prevented 15 million barrels of oil per day from reaching the market. If tensions do not ease immediately, oil prices are expected to rise further. Such a surge in oil prices carries the risk of increasing inflation globally and reducing consumer purchasing power. Although OPEC+ nations have agreed to a slight increase in production, the problem is unlikely to be resolved quickly as the produced oil still needs tankers to reach the market.

The impact of this crisis is also clearly visible in the stock market. Japan's Nikkei futures, which are heavily dependent on oil, fell by 1.1 percent, while major US Wall Street indices, S&P 500 and Nasdaq futures, also declined. In the currency market, the Swiss Franc strengthened against the dollar, while the Japanese Yen and Australian Dollar weakened.

In addition, the collapse of the UK mortgage lender MFS has spread fears of further financial insecurity in the banking sector, which has helped push investors towards government bonds.

Reuters