Global oil prices surge over 4%

The oil prices, which had recently been stable, have soared by more than 4% following a surprise attack on Israel by the Palestinian militant group Hamas. The armed conflict has heightened the risk of war, causing turbulence in financial markets worldwide. Investors are flocking to safe-haven assets such as the U.S. dollar and gold.

On Monday, West Texas Intermediate (WTI) crude oil futures on the New York Mercantile Exchange surged above 88 U.S. dollars per barrel during the day, a 4.7% increase from the previous trading day. Brent crude also saw a rise of over 4.5%.

The spike in oil prices can be attributed to the increasing likelihood of the armed conflict between Israel and Palestine escalating into a proxy war involving the United States and Iran. If this conflict escalates further, there's a risk that Iran may block the Strait of Hormuz, a critical passage for 20% of the world's crude oil. Such an event could result in a sharp increase in international oil prices. Adding to this volatility, the ongoing conflict in Ukraine and production cuts by major oil producers are already contributing to unstable oil prices. As geopolitical tensions rise in the Middle East, oil prices will likely become even more unpredictable in the near future.

International financial markets have also been impacted by the aftermath of the armed conflict, with investors flocking to safe-haven assets. The dollar index, which shows the dollar's value against a basket of major currencies, was up 0.3% on the day at 106.3. International gold prices for December delivery were also up about 1% from the previous trading day. The New York stock market reflected the situation's impact, with major index futures decreasing ahead of the opening bell on Monday. If the U.S. and other major markets fall on that day, it could have significantly impacted the stock market, which opens on Tuesday after a three-day holiday.

"It is only a matter of time before international oil prices exceed $100 per barrel due to the conflict," said Hwang Se-un, a Korea Capital Market Institute researcher. "Concerns about inflation and a global economic downturn are likely to drive a downward trend in the domestic financial market until the end of the year."


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