Middle East Tensions Spark Oil Price Surge Amid Global Market Volatility
Oil prices rose to near $89/b and $82/b for Brent and WTI respectively, as renewed fighting in Lebanon and further tanker attacks in the Strait of Hormuz clouded prospects for ending the US-Iran war. Several vessels, including ships linked to ADNOC, were attacked in Hormuz, although Gulf producers continue to move significant volumes through the waterway. Iran and Oman are moving closer to an agreement over managing Hormuz, but the US is not involved and continues to demand unrestricted passage through the route.
The continued geopolitical uncertainty and risks to key shipping routes have kept a substantial risk premium embedded in crude prices. Gold extended its two-week advance, trading near $4,400/oz, as weaker US retail sales and consumer sentiment weighed on the dollar and reduced expectations of an imminent Fed rate hike. Gold continues to benefit from renewed investor demand and sustained central bank purchases, particularly from China.
The Israeli economy rebounded sharply in Q2 2026, expanding 15.4% annualized (3.6% q/q), significantly above market expectations and reversing the revised 2.2% contraction in Q1. The strong growth print was accompanied by easing inflation, with July CPI slowing to 1.5% y/y, remaining comfortably within the Bank of Israel's 1%-3% target range.