Oil prices have surged to a six-month high following reports that Israel is preparing for possible attacks from Iran.
Israeli officials anticipate potential drone or missile strikes on key government sites within the next 48 hours.
In response, the United States is bolstering its defenses and has deployed additional resources to the area, while diplomatic efforts to reduce tensions continue.
Nonetheless, the oil markets have been disrupted, with traders worried about the conflict in the Middle East expanding.
The price of benchmark Brent crude approached $92 a barrel, the highest since October when Hamas initiated attacks on Israel.
The day saw a 0.8% increase in oil prices, contributing to a nearly 24% rise since the beginning of the year.
Jason Hollands, a director at Bestinvest, noted, “Heightened tensions in the Middle East, with the looming threat of a conflict between Iran and Israel, have driven up prices for oil and precious metals.”
A resurgence in oil prices could reignite worries about central banks’ capacity to return inflation to the usual 2% target over the long term. The European Central Bank, the Bank of England, and the US Federal Reserve are planning to lower their interest rates for the first time since the start of the Covid-19 outbreak, following a gradual decrease in inflation over the past 18 months.
Bank of America analysts have stated, “While the shift in commodity prices might not question the start of the cutting cycle in June, it could prevent the ECB from hastening the cycle in December.”
