During the past few weeks, the ongoing conflicts between Israel-Iran proxies and Russia-Ukraine have reached new escalation. Last weekend there was a large preemptive strike by Israel in Lebanon. At the same time Ukraine has now started to attack Russian territory directly in reply Russia attacked with drones and missiles yesterday.
Given these conflicts are occurring in important regions of trade and commodity. The price of Oil increased by 6% in the last two trading sessions. Similar moves were witnessed in other commodities and the index itself. However, on an absolute basis, these prices are near January 2024 low.
As global central banks enter the rate cut stage the quantum along with the pace of it is highly uncertain for now. This would impact the outcome once the stage gets completed as the neutral rate might be much higher than estimates currently.
The next few months are important as Israel begins to receive more defence supplies from the new package and the same occurs in Ukraine. If the escalation leads to a new stage of wars then oil along with other commodities might end up higher by the year's end.
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