Iran-Israel War: How This Will Hurt The Indonesian Economy?
The risk of a wider regional war is looming in the Middle East. On Sunday, Iran warned Israel and the United States of a "much larger response" if they retaliate for its mass drone and missile attack on Israeli territory the previous Saturday.
Iran launched explosive drones and missiles at Israel in retaliation for a suspected Israeli attack on its consulate in Syria on Apr. 1, marking the most significant attack on Israel in decades. The world is waiting for the two countries' next move. The key question is whether Iran will consider this retaliation a measured and final response and whether Israel decides to escalate or not.
Rear Admiral Daniel Hagari, a spokesperson for the Israel Military, said that Iran fired approximately 300 explosive drones, cruise, and ballistic missiles. He claimed that Israel, with support from the US, Britain, Jordan, and other allies, intercepted 99 percent of them. The US has stated it will not partake in any Israeli response to prevent further escalation. Nevertheless, Centrist Israeli minister Benny Gantz affirmed that Israel would "exact the price from Iran when the timing is right."
The conflict has already impacted global commodity and financial markets. Oil prices, gold, the dollar, bonds, and stocks are experiencing sharp movements as investors and traders react to geopolitical uncertainty and inflation concerns. The Israel-Iran conflict has added to the Federal Reserve's caution regarding potential rate cuts, as surging oil prices could disrupt their efforts to combat inflation. Previously, market projections for rate cuts had moved back, particularly following stronger-than-expected US retail sales data despite sticky inflation.
Since early April, Brent crude oil has hovered around US$90 per barrel. During Monday's trading session, the US stock market experienced selling pressure, causing a drop, while the US dollar index has surpassed 106, reaching its highest level since October last year. 10-year US Treasury yields surged to 4.6 percent, at one point reaching their highest level since mid-November, and gold prices continue to hit record highs.