Oil and gold prices went up after US officials said that a missile from Israel hit Iran. Brent crude, which is the price used internationally, went up by 1.8% to $88 per barrel. Gold prices also rose and almost hit a record high, reaching nearly $2,400 per ounce.
People are worried about how Israel will respond to Iran’s recent drone and missile attack. If the situation gets worse in the Middle East, it could disrupt the supply of oil. When the news first came out, oil prices went up by 3.5%. But then, Iranian media said that there was no damage in Isfahan province, where the attack happened. This made oil prices go down again.
High oil prices can make things more expensive, which can lead to inflation. Oil is used to make things like petrol and diesel, so if its price goes up, then the cost of living can go up too.
Randeep Somel, who manages funds at M&G Investment Management, said that the main worry for markets is inflation. In the UK, inflation is still above the Bank of England’s target of 2%. Some people think that the Bank might not lower interest rates until the summer or later this year.
The price of gold often goes up when people are uncertain about the future. It’s seen as a safe investment during times like these.
The tension in the Middle East has also made people worry about shipping through the Strait of Hormuz, which is between Oman and Iran. About 20% of the world’s oil goes through this route. Most of the oil that Opec countries export goes through there too. Iran is one of the biggest oil producers in the world, and it’s also a member of Opec.
The increase in oil prices at first was because people were worried about a new conflict between Israel and Iran. This shows how unstable and unpredictable things are in the Middle East.
The stock markets went down because of this news. In the UK, the FTSE 100 and FTSE 250 fell in early trading. In Asia, Japan’s Nikkei 225 and Hong Kong’s Hang Seng also went down. Even the Kospi in South Korea dropped.
