The Middle East, which was considered relatively quiet just last week, has been shaken by a massive attack launched by Hamas against Israel from Gaza. This attack, unlike anything seen in decades, caught Israeli intelligence completely off guard. The extent of the damage and the fallout from the attack is still uncertain, but Israel has vowed to leave Gaza in ruins. With over 3,000 missiles launched by Hamas in less than 24 hours, Israel’s former head of Mossad expressed astonishment at the scale and effectiveness of the attack. Many fingers are pointing towards Iran as a possible instigator.
This attack comes at a critical time when the US was attempting to broker a defense pact with Saudi Arabia, and it will now be challenging for Saudi Arabia to recognize Israel as part of that deal due to the expected long and brutal response against Hamas. While Israel-Palestine conflicts typically don’t impact global markets, the magnitude of this attack and its potential to escalate beyond Gaza is likely to grab the attention of markets on Monday. Consequently, there may be an increase in demand for safe-haven assets such as gold and Treasuries, as well as concerns regarding commodities like oil. Moreover, there may be a surge in the value of the US dollar.
In summary, the recent massive attack by Hamas against Israel has shattered the notion of a quiet Middle East, as stated by White House National Security Adviser Jake Sullivan just a week ago. The scale and effectiveness of the attack, which Israeli intelligence failed to anticipate, have shocked observers. With over 3,000 missiles launched within a short span, the situation remains uncertain and the blame is being directed towards Iran. This attack jeopardizes the US’s defense pact negotiations with Saudi Arabia, and its potential for further escalation may impact global markets, triggering a surge in demand for safe-haven assets and potential disruptions in commodities.
