**Middle East Tensions Send Shockwaves Through Global Markets**
The recent missile attack by Iran on Israel has sparked fears of an all-out war, sending shockwaves through global markets. The unprecedented attack, which saw over 180 ballistic missiles launched at several sites across Israel, has left the Middle East on edge. Despite Israeli authorities reporting no casualties, the event marks a turning point in the escalating tit-for-tat moves between the two long-time foes.
**Defense Stocks Soar as Oil Prices Rise**
The attack has led to a surge in defense stocks, with industry watchers anticipating a likely Israeli retaliation against Iran. Oil prices have also risen, with the December delivery contract of global benchmark Brent trading at $75.37 per barrel. The increase in oil prices has sparked concerns over the potential disruption to global crude supplies, with as much as 4% of global oil supply at risk.
**Experts Warn of Further Escalation**
Frederique Carrier, head of investment strategy for the British Isles and Asia at RBC Wealth Management, warned that the focus should be on Iran and the potential attacks on regional infrastructure. “That really is the one event that we are looking for, and which could determine a more dangerous path for stock markets, for risk assets in general,” she said.
Lewis Sage-Passant, an adjunct professor of intelligence at Sciences Po in Paris, described energy markets as jittery, with investors watching for Israel’s next moves. “Iran depends on a handful of ‘chokepoint’ export terminals, which will be tempting targets for Israel,” he said.
**U.S. Warns of Severe Consequences for Iran**
Following the attack, U.S. National Security Advisor Jake Sullivan warned of severe consequences for Iran, saying that the U.S. would staunchly support Israel. However, Washington’s efforts to de-escalate and prevent a region-wide conflict have clearly failed, according to Roger Zakheim, a former U.S. deputy assistant defense secretary.
**Investors Bracing for Impact**
The attack has led to a rise in U.S. defense stocks, with European counterparts also ticking higher on Wednesday morning. “Israelis now will respond, not only in kind, but do what is necessary to restore deterrence,” Zakheim said. Questions remain whether a strong Israeli response would restore deterrence or trigger further escalation from Iran and tip the nations into a full-blown war.
**Oil Prices Set to Rise Further**
Some market watchers are warning that oil could hit $100 per barrel, although Sara Vakhshouri, founder and president at SVB Energy, expressed doubts over such a forecast. “Definitely, prices will have an upward trend. [But] the other thing is that the market is focusing on huge uncertainty on both sides… [whether] it’s the demand side or the geopolitical side,” she said.
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