May 24, 2024

Brighton Journal

Complete News World

Oil and gold prices rise as the United States announces that Israel has struck Iran

Oil and gold prices rise as the United States announces that Israel has struck Iran
Comment on the photo, Iran is the seventh largest oil producer in the world

  • author, Mariko oy
  • Role, Business reporter

Oil and gold prices fell after Iranian authorities appeared to downplay reports of an attack from Israel.

Brent crude international standard He fell after jumping briefly to more than $90 a barrel after reports of an attack emerged.

Gold briefly approached a record high before settling below $2,400 an ounce.

There are fears that the escalation of the conflict in the Middle East will disrupt oil supplies.

Investors are closely watching Israel's response to Iran's direct drone and missile attack last weekend.

Oil prices had jumped by up to 3.5% initially. But Brent crude then fell to nearly $87 a barrel after Iranian state media claimed there was “no damage” in Isfahan province where there were reports of explosions.

Sharp and persistent rises in oil prices threaten to fuel inflation. Countries depend heavily on the commodity used to produce fuel, such as gasoline and diesel.

Fuel and energy prices have been the main driver behind rising costs of living around the world in the past two years.

“The concern for markets would primarily be inflation, which would actually increase inflation,” Randeep Somil, fund manager at M&G Investment Management, told the BBC's Today programme.

“In the UK, inflation rates remain at around 3.2% – still somewhat off target – and have become a concern for policy makers,” Summel said.

“It is good to see that this has not escalated further and we hope that the disruption in the markets is short-lived.”

The price of Brent crude is well below the highs reached after Russia's invasion of Ukraine in February 2022 when a number of major economies imposed sanctions on the oil-producing country.

The price of oil reached $125 per barrel in the weeks that followed, leading to an extended period of high home energy bills.

The price of gold often rises during times of uncertainty as it is seen as a safe investment.

Rising tension in the Middle East has led to concerns about whether shipping through the Strait of Hormuz between Oman and Iran will be affected.

It is a vital shipping route, through which about 20% of the total global oil supply passes.

Members of the Organization of Petroleum Exporting Countries (OPEC) – Saudi Arabia, Iran, the United Arab Emirates, Kuwait and Iraq – send most of the oil they export through the strait.

Iran is the seventh largest oil producer in the world, according to the US Energy Information Administration, and the third largest member of OPEC.

Energy market expert Vandana Hari of Vanda Insights said the initial rise in oil prices was a “knee-jerk reaction to fears of a renewed escalation of the war between Israel and Iran.”

Stock markets were mixed as investors reacted to recent events.

In the United States, the Dow Jones Industrial Average rose nearly 0.5% in early trading, while the S&P 500 was flat and the Nasdaq fell 0.6%.

In the United Kingdom, the FTSE 100 index fell 0.25% in mid-afternoon trading while the FTSE 250 index fell 0.6%.

In Asia, Japan's Nikkei 225 fell 2.7%, while Hong Kong's Hang Seng fell 0.9%.