© Reuters
Investing.com – Tension prevails in European market indices -,, at the opening of the trading week that came after an unprecedented attack by Hamas on Israel, which reignited the conflict in Gaza and the Middle East.
Franco Machiavelli, Head of Analysis at Admirals Spain, analyzes the possible repercussions of this tragic situation: “The new war between and the Palestinians in Gaza has likely ended hopes, at least for the time being, for the normalization of relations between Israel and Saudi Arabia. Which may disrupt the financial markets and cause market turmoil. As for the Israeli currency, it witnessed a decline of approximately 10% against and it is possible that it will continue to break in the following days.” “Investment in the Israeli technology sector will naturally be hurt,” Machiavelli adds.
Markets are closely monitoring the possibility of contagion to stocks in the event of a greater escalation involving the participation and intervention of other countries, all in the midst of the battle against inflation, which could collapse and pose a significant risk of accelerating prices and fuel prices.
The biggest winner of the ongoing war?
The recent confrontation may negatively affect oil prices, potentially exceeding $100 per barrel in the short term.
To enter into context: Let us remember that half a century ago, OPEC stopped exporting crude oil to countries that supported Israel during the Yom Kippur War. However, the current situation is different from what it was 50 years ago, as Machiavelli says: “All Arab countries are not “Unified in a joint attack on Israel, but countries such as Syria, Jordan, Saudi Arabia and Egypt stand neutral.”
This expert adds: “Despite this, the current situation is very delicate due to tension and the high line of risk of escalation due to any factor that includes external interference on behalf of Israel, especially after the recent statements of Joe Biden that ratified the United States’ absolute support for Israel.”
As for Iran, crude oil production increased by about 700,000 barrels per day this year, becoming the second most important source of additional supplies in 2023, after American oil.
He continues: “However, it is comforting to remember that one of the reasons the White House tolerated Iranian oil exports in the past was because of their negative impact on Russia, but the current context changes the model scenario, and therefore the renewal of the agreement will be in doubt.”
Machiavelli expects that renewed conflict in the Middle East will lead the Biden administration to tighten sanctions, which in turn could push oil prices above $100, as we mentioned above.
“On the other hand, Russia and Venezuela could benefit in this context, as both countries face sanctions that have affected their oil exports,” he warns.
Machiavelli says, “If Washington decides to impose additional sanctions on Iran, this could open the door for Russian-sanctioned oil exports to gain market share and achieve higher prices. In addition, Venezuela could also benefit if the US administration chooses to ease sanctions as a measure to ease pressure.” “. in the oil market.
He concludes, “The development of the coming weeks will be crucial to determining the global scenario and the larger geopolitical and macroeconomic repercussions, but until then, the market can choose risk aversion as a wise move, show greater risk aversion and choose safe havens.”
2023-10-09 14:33:00
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