Rising tensions ahead of a potential Israeli ground invasion drive Oil prices higher

XTB Analysis Team XTB Poland

Oil prices started the week with a significant bullish price gap due to the unexpected Hamas attack on Israel during the weekend. As the subsequent days revealed that the conflict appeared to remain confined to Israel and the Gaza Strip, without broader destabilization across the Middle East region, which constitutes a significant portion of global oil supply, crude prices began to recede from Monday's gains. Nonetheless, concerns arose as Israel issued evacuation orders for civilians in the northern Gaza Strip, hinting at a potential Israeli ground invasion which prompted condemnation from Arab leaders, raising apprehensions of potential regional spillover. These worries have become a driving factor behind the current surge in oil prices, with some investors taking long positions in anticipation of an escalation in hostilities over the weekend and while the overall situation becomes more uncertain. Analyzing the price of Brent Oil, it is evident that sellers managed to nearly fill the gap from Monday before prices started a rebound from the $85.50 per barrel range. The substantial upward movement observed today has propelled oil above an important resistance zone as well as above Monday's highs. While the weekend approaches and tensions rise, any major escalation in the conflict or spillover could lead to massive repercussions for oil prices as well as the general market sentiment and potentially drive oil to a new high bringing back once again concerns of a rise in inflation across the globe.

Here's our latest market commentary. Don't hesitate to get in touch if you require anything further.

Author

XTB Analysis Team

XTB Poland

EUR/USD tumbles below 1.1800 as Middle East turmoil drives US Dollar demand

The EUR/USD pair falls to near 1.1770 during the early Asian session on Monday, pressured by a renewed US Dollar demand. The Greenback gathers strength against the Euro as the conflict across the Middle East is heightening traders' anxiety, boosting the safe-haven currencies.

GBP/USD trims losses, retests 1.3460

After briefly challenging its key 200-day SMA near 1.3440, GBP/USD now manages to regain some balance and revisit the 1.3460 zone on Friday. Cable’s pullback comes as the selling pressure on the Greenback gathers traction, reigniting some recovery in the risk-linked space.

Gold jumps over 2% toward $5,400 after US, Israel attack Iran

Gold is on fire at the start of the week, a widely expected move, as investors seek harbor in the traditional store of value, following the continued US and Israel attacks on Iran. The bright metal opened with a bullish gap of about $17 and rallied toward the $5,400 level as Asian traders hit their desks and reacted negatively to the weekend news of the Middle East conflict, rushing for cover in Gold.

Iran escalation: Quick thoughts on markets

Markets are likely to open the week with risk-off, with declines led by airlines, cyclicals and trade-exposed names, while energy, defense and “strategic” sectors may be relatively steadier.

Crisis in the Middle East: The market reaction

A primer on how markets will open on Monday, and why geopolitical risk may not be easily absorbed by financial markets this time around. Geopolitics and events between Iran, the US and the wider Middle East will dominate financial markets on Monday. The situation has continued to escalate as we move through Sunday.

Starknet unveils strkBTC, shielded Bitcoin transactions on Ethereum Layer 2

Starknet, the Ethereum Layer 2 network developed by StarkWare, today announced strkBTC, a wrapped Bitcoin asset that introduces optional shielding while preserving full DeFi composability.