The Israeli armed forces (IDF) announced Tuesday that they have begun local ground operations against Hezbollah targets in southern Lebanon. According to the army's announcement, “targeted ground raids” are being carried out in villages close to the Israeli border. The operation represents a significant escalation in the months-long conflict between Israel and Iranian-backed Hezbollah. Since the start of the Gaza war last October, the both sides have regularly fired across the border.
- Israeli Prime Minister Benjamin Netanyahu on Monday warned Iran, which supports both Hezbollah and Hamas, saying that “there is no place in the Middle East that Israel cannot reach.” The words came days after an air strike south of Beirut that killed longtime Hezbollah leader Hassan Nasrallah.
- In turn, a number of Western countries have warned Iran against direct involvement in the conflict, as this could result in Israel launching attacks on its nuclear infrastructure. At this point, Iran has not indicated whether it intends to intervene in any way, so Wall Street almost ignores the spreading conflict scenario.
- The United States, on the other hand, is trying to prevent the conflict from spreading in any way it can, particularly as the U.S. presidential election is a month away.
However, markets still see low odds for directly, military response from Iran or Saudi Arabia, so, the overall conflict is perceived as local war, not crucial for global oil supply dynamics.
Start investing today or test a free demo
Create account Try a demo Download mobile app Download mobile appHezbollah's new acting leader Naim Kassem announced that the organization will continue the fight despite the deaths of Nasrallah and other senior commanders. He stated that the fighters are ready, and killed Hezbollah leaders have already been replaced.
- The Israeli military has called on residents of dozens of Lebanese border towns to evacuate to the north. The UN Force in South Lebanon (UNIFIL) described the Israeli operation as a “dangerous development” and called for de-escalation.
- The international community is watching the developments with concern, fearing an expansion of the conflict to the entire region. Turkey condemned the Israeli operation as an “unlawful invasion attempt” and Italy called for “urgent and necessary de-escalation.”
Market reaction
The first reports of the start of the ground operation came at 1 AM BST., but at that time we did not see a reaction in the oil market. Oil began to lose noticeably near the start of the European session, but these losses are now being recovered.
Source: Bloomberg Finance LP, XTB
Gold, on the other hand, has been gaining all along since yesterday's pullback around 8 pm, when Jerome Powell indicated that the Fed does not need to rush to cut rates. Around 1 AM BST, no reaction was seen. Nevertheless, gold has gained about 0.7% since the start of today's session.
Source: xStation5
The content of this report has been created by XTB S.A., with its registered office in Warsaw, at Prosta 67, 00-838 Warsaw, Poland, (KRS number 0000217580) and supervised by Polish Supervision Authority ( No. DDM-M-4021-57-1/2005). This material is a marketing communication within the meaning of Art. 24 (3) of Directive 2014/65/EU of the European Parliament and of the Council of 15 May 2014 on markets in financial instruments and amending Directive 2002/92/EC and Directive 2011/61/EU (MiFID II). Marketing communication is not an investment recommendation or information recommending or suggesting an investment strategy within the meaning of Regulation (EU) No 596/2014 of the European Parliament and of the Council of 16 April 2014 on market abuse (market abuse regulation) and repealing Directive 2003/6/EC of the European Parliament and of the Council and Commission Directives 2003/124/EC, 2003/125/EC and 2004/72/EC and Commission Delegated Regulation (EU) 2016/958 of 9 March 2016 supplementing Regulation (EU) No 596/2014 of the European Parliament and of the Council with regard to regulatory technical standards for the technical arrangements for objective presentation of investment recommendations or other information recommending or suggesting an investment strategy and for disclosure of particular interests or indications of conflicts of interest or any other advice, including in the area of investment advisory, within the meaning of the Trading in Financial Instruments Act of 29 July 2005 (i.e. Journal of Laws 2019, item 875, as amended). The marketing communication is prepared with the highest diligence, objectivity, presents the facts known to the author on the date of preparation and is devoid of any evaluation elements. The marketing communication is prepared without considering the client’s needs, his individual financial situation and does not present any investment strategy in any way. The marketing communication does not constitute an offer of sale, offering, subscription, invitation to purchase, advertisement or promotion of any financial instruments. XTB S.A. is not liable for any client’s actions or omissions, in particular for the acquisition or disposal of financial instruments, undertaken on the basis of the information contained in this marketing communication. In the event that the marketing communication contains any information about any results regarding the financial instruments indicated therein, these do not constitute any guarantee or forecast regarding the future results.
