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A Black Saturday In Gaza

Mon, Dec 29 2008, 04:20 GMT
by Oil N' Gold Team

Oil N' Gold

Oil price rose 4.5% to 39.3 in Asian morning after surging more than 6% last Friday as the political tension in the Middle East may threaten oil supply.

Over the weekend, Israel has launched an air strike campaign in the Gaza Strip which has already killed around 300 people. According to Israel, the military operation was a response to Hama's 'almost-daily' rocket attack since the party sought control of Palestine in January 2006.

The tensions between Israel and Palestine began 60 years ago when Israel was 'established' after winning the war on May 15, 1948 – the Nakba Day. Over 700 000 Palestinians became refugees. In 1967, Israel occupied Gaza Strip and other Palestinian areas after the 'Six Day War'. 1987 marked the first Palestinian uprising which killed more than 1000 Palestians and 160 Israelis. The war ended in 1993. In 2007, Hamas sought control of Gaza using violence. In 2008, Hamas and Israel agreed to halt the rocket attacks and Israel agreed not to attack Gaza. However, Palestine resumed its rocket attack to Israel (which was said to have incurred Gaza again) in November.

As the Middle East pumped about 40% of the world's oil, massive shutdown of facilities due to the war will greatly affect oil supply despite current weak demand. In July 2006, when Israel attacked Lebanon, oil price once rose to 78/bbl, the record high at that time.

Gold price also surged following crude oil. Adding 1.6% to 885 after gaining 2.7% Friday, the massacre in Gaza also helped performance of the precious metal as investors would like to put money in safe-haven.

The dollar weakened against the Euro (1.415) and pound (1.469) as the market anticipates the S&P/Case-Shiller House Index to be released tomorrow will show a decline of 18% yoy in October. The ISM manufacturing index is also expected to have dropped to 35.4 in December, the lowest level in 3 decades.

Published on  Mon, Dec 29 2008, 04:21 GMT