Global oil prices surged on Monday, driven by escalating tensions between Israel and Iran. West Texas Intermediate (WTI) crude oil futures, a key benchmark, climbed 3.6% to close at $79.60 per barrel, marking its fifth consecutive day of gains. This surge was fueled by growing concerns that a potential conflict between Israel and Iran could disrupt global oil supplies significantly.
The current crisis stems from the death of a top Hamas leader, Ismail Haniyeh, in Tehran on July 31. Reports suggest that Iran, along with its Lebanese proxy Hezbollah, are considering retaliatory action against Israel. These reports have further heightened anxieties about a wider regional conflict.
In response to the escalating tensions, the US has significantly increased its military presence in the Middle East. The Pentagon has deployed a carrier strike group equipped with F-35 fighter jets and additional forces to deter potential Iranian aggression towards Israel. Additionally, the US Navy has moved the nuclear-powered submarine USS Georgia, armed with cruise missiles, into Middle Eastern waters.
The situation in Gaza remains dire. On Saturday, Israeli airstrikes targeted a school building in Gaza City, resulting in the deaths of hundreds of people, according to Palestinian health authorities. The Israeli Defense Forces (IDF) claimed the building housed Hamas and Islamic Jihad militants. The IDF’s chief of staff, LTG Herzi Halevi, emphasized the importance of maintaining a high level of preparedness for both offensive and defensive operations.
Despite the escalating tensions, US defense stocks closed relatively flat on Monday. However, they are trading around 3% below record highs. Some of the top performers in the sector include Curtiss-Wright Corporation, Huntington Ingalls Industries, Northrop Grumman Corporation, AeroVironment, Inc., and Lockheed Martin Corporation.
