The financial markets remain gripped by anxiety over rising tensions in the Middle East, and concerns that the Israel-Hamas war could drive up oil prices, fuelling inflation. Markets across the Asia-Pacific region are in the red today, with Japan’s Nikkei losing 1.85%, and China’s CSI 300 down 1.9% . Gold hit its highest level since 1 August yesterday, touching $1,962 per ounce, as investors favored traditional safe-haven assets. Oil jumped too, with Brent crude hitting $93 per barrel on Wednesday, before slipping back to $91 this morning. Investors have also been driving down the price of government bonds. This pushed the yield, or interest rate, on 10-year US government bonds to their highest since 2007, early in the financial crisis.

The Middle East is a major oil-producing region, and any instability in the region can lead to speculative price hikes due to potential supply disruptions. 
Historically, Middle Eastern crises have often led to spikes in oil prices, affecting global inflation rates and trade balances . The specter of a wider conflict in the Middle East poses a fresh threat to the global economy just as the world emerges from shocks triggered by Covid-19 and the Ukraine war.

In conclusion, the situation in the Middle East is a cause for concern for investors and financial markets around the world. The conflict between Israel and Hamas has led to a rise in oil prices, which has fueled inflation and caused concern among investors. The Middle East is a major oil-producing region, and any instability in the region can lead to speculative price hikes due to potential supply disruptions. Historically, Middle Eastern crises have often led to spikes in oil prices, affecting global inflation rates and trade balances. The specter of a wider conflict in the Middle East poses a fresh threat to the global economy just as the world emerges from shocks triggered by Covid-19 and the Ukraine war.