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Israel-Gaza war: Oil prices spike, Israel begins sell-off to support shekel

Israel's currency tumbled to its lowest level against the dollar since 2016 and the central bank is selling foreign reserves to prop up its value.

Oil prices spiked on Monday amid concerns that the Israel-Gaza conflict could disrupt output from the Middle East. Israel's central bank also sold off $30 billion of foreign reserves to support the ailing shekel, which has reached its lowest level against the dollar since 2016.

The central bank said it would sell as much as $30 billion in foreign reserves and extend that sum up to $15 billion through swap mechanisms to support the markets, according to a statement on Monday. The Bank of Israel has about $200 billion in foreign currency reserves and said the sell-off was to "moderate volatility in the shekel exchange rate and to provide the necessary liquidity for the continued proper functioning of the markets.”

Crude oil futures rose over 3% to $85 a barrel after increasing more than 5% at one point on Sunday night. Brent crude, the international benchmark, rose by $2.25 a barrel to $86.83, and US prices also climbed. 

On Saturday, the Gaza-based militant group Hamas launched a surprise attack on Israel, firing thousands of rockets and sending fighters into Israeli territory, storming southern villages on a killing spree. Israel has retaliated by bombarding Gaza with airstrikes. More than 700 Israelis and at least 560 Palestinians have been killed in the fighting, and dozens of Israelis have been kidnapped and taken hostage in Gaza. 

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