Oil Prices Jump as Hamas Attack on Israel Ignites Supply Fears

Oil prices rallied while the dollar and yen advanced today after Hamas launched a shock attack on Israel at the weekend, sparking fresh concerns about tensions in the Middle East.

The crisis fanned concerns about supplies of crude from the region at a time when supply worries are already high owing to Saudi Arabia and Russia’s output cuts.

It has also renewed fears about the impact on inflation, with energy costs a key driver of spiking prices, giving a fresh headache to central banks as they try to ease up on interest rate hikes to avoid recessions.

The surprise attack and Israel’s declaration of war in response to it have left more than 1,000 dead and raised concerns that a potential broadening of the conflict could draw in the United States and Iran.

A decidedly risk-off mood also saw investors push into the safety of the dollar, which was up against the pound and euro, as well as the Australian and New Zealand dollars.

The yen, considered one of the safest currencies, strengthened against the greenback, though it still remains locked around 11-month lows.

Gold, another key haven, gained around one percent.

Equity markets were mixed, with Shanghai dropping on its first day back after a week-long holiday as investors continue to fret over the stuttering Chinese economy.

There were also losses in Mumbai, Singapore, Manila, Bangkok, and Wellington, though Hong Kong rose in shortened trade, having been closed in the morning owing to a typhoon.

Sydney and Jakarta eked out gains. Tokyo was closed for a holiday.

London edged up while Paris and Frankfurt were lower.

The tepid performance came despite a rally on Wall Street, where traders welcomed data showing a forecast-busting jump in new jobs but wage growth slowing.

Still, there are worries the bank will hike one more time before the end of the year, with officials determined to bring inflation to heel and keep it at their two percent target.