Oil prices surged on Monday as Hamas, a Palestinian militant group, launched a surprise attack on Israel over the weekend, reigniting concerns about tensions in the Middle East. The crisis compounded existing worries about crude supplies from the region, which were already under pressure due to output cuts by Saudi Arabia and Russia.
The attack by Hamas and Israel’s subsequent declaration of war has resulted in more than 1,000 casualties and prompted fears of a potential escalation that could draw in the United States and Iran. These developments drove oil prices to surge more than five percent in early Asian trading, although they later retreated slightly.
The rising oil prices have also rekindled fears about inflation, with energy costs being a significant factor contributing to the recent surge in prices. This poses a fresh challenge for central banks as they attempt to navigate interest rate hikes in order to prevent economic recessions.
In other news, the Labour Party in the UK has announced plans to establish an anti-corruption commissioner in an effort to recover billions of pounds lost to fraud and wasteful spending during the Covid-19 pandemic. Shadow Chancellor Rachel Reeves will outline the proposal during her speech at the Labour conference. It is estimated that Covid-related fraud has cost taxpayers £7.2 billion ($9.35 billion). Reeves will also pledge to expedite the planning process for critical infrastructure projects if Labour comes into power. However, there is likely to be a clash between the Labour leadership and Unite, the party’s largest financial backer, over the union’s call for the nationalisation of critical infrastructure, starting with the privatised electricity and gas networks.
Meanwhile, shares in Metro Bank, a troubled British lender, opened 19% higher on Monday following an overnight fundraising deal aimed at strengthening its balance sheet. The bank announced a £325 million ($397 million) capital raise and a £600 million ($732 million) debt refinancing agreement. This deal will result in majority shareholder control being handed over to Colombian billionaire Jaime Gilinski, who is the bank’s largest investor.
