The Israeli-Palestinian conflict caused oil prices to soar, and the Bank of Israel urgently sold $30 billion in foreign exchange reserves
Oil prices soared on Monday amid fears that Israel's conflict with Gaza could disrupt production in the Middle East. The Bank of Israel also dumped $30 billion in foreign exchange reserves to support a weak shekel, which has reached its lowest level against the dollar since 2016.
According to a statement on Monday, the Bank of Israel said it would sell up to $30 billion in foreign exchange reserves and expand their amount to $15 billion through a swap mechanism to support the market. The Bank of Israel, which has about $200 billion in foreign exchange reserves, said the sell-off was to "moderate the volatility of the shekel exchange rate and provide the necessary liquidity for the continued normal functioning of the market." ”
Crude futures rose more than 3 percent to $85 a barrel after rising more than 5 percent on Sunday night. International benchmark Brent crude rose $2.25 to $86.83 a barrel, and U.S. prices also climbed.
On Saturday, the Gaza-based militant group Hamas launched a surprise attack on Israel, firing thousands of rockets and sending fighters into Israeli territory, striking southern villages and carrying out a killing spree. Israel retaliated with air strikes and the bombing of Gaza. More than 700 Israelis and at least 560 Palestinians were killed in the fighting, and dozens of Israelis were kidnapped and taken hostage in Gaza.
Since then, with the support of the United States and other Western allies, the Israeli government has declared war on Hamas. Thousands of Israeli troops and tanks are massing along Gaza's southern border in preparation for ground operations. As of Monday afternoon local time, the enclave was blocked by Israeli forces and had no access to water, electricity or fuel.
On Saturday, Islamist militant groups launched a shocking attack that underscored Israel's biggest security defeat since the 1973 Yom Kippur war.
Regional geopolitical instability has led investors to fear that conflict could disrupt fossil fuel production. Although Israel and the Palestinian territories are not oil producers, tensions have raised fears that the conflict will escalate involving other Israeli enemies, such as Iran and Lebanon, which do produce oil. Both Iran and Lebanon's Allah party have been accused of involvement in the war, but Hamas's allies deny this.