With concern about a spillover over the long-running conflict to the wider stage, oil and other traditional global ‘safety’ plays caught a bid. Specific fears centered on oil supply implications if Iran were connected to the attacks and what it may mean for U.S. moves to cement closer ties between Saudi Arabia and Israel.
Saudi officials had reportedly told the White House on Friday they were willing to raise output next year as part of that proposed Israel deal. An increase in Saudi output would have helped to relieve tightness after months of supply cuts from key producers Saudi Arabia and Russia.
What’s more, any direct connection to Iran’s possible involvement would scupper any easing of sanctions there and affect an estimated 3% of world oil supply. The Wall Street Journal reported on Monday Tehran had helped Hamas plot the attack over several weeks.
But with so much in flux, the rise in crude was modest so far. At $85.25 per barrel, U.S. crude was only trading back where it was last Wednesday and year-on-year prices remain negative to the tune of 5%.
Small safety bids in gold and U.S. Treasury futures were similarly restrained. U.S. Treasury cash bond markets were closed on Monday for the Columbus Day holiday, even though the New York Stock Exchange and Nasdaq are open later.
Stock futures fell back about 0.5% ahead of the bell, paring about half Friday’s post-payrolls rally.
Tel Aviv share indices fell nearly 7% on Sunday, led by a 9% drop in banking shares, and were edging further lower on Monday. The shekel hit a near 8-year low, prompting the Bank of Israel to promise up to $30 billion in intervention to support the currency.
