<figure class="wp-block-image size-full"><img loading="lazy" decoding="async" width="1858" height="1045" src="https://cms.cnbcafrica.com/wp-content/uploads/2024/10/103308639-GettyImages-128384632.jpg" alt="" class="wp-image-547350" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2024/10/103308639-GettyImages-128384632.jpg 1858w, https://cms.cnbcafrica.com/wp-content/uploads/2024/10/103308639-GettyImages-128384632-300x169.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2024/10/103308639-GettyImages-128384632-820x461.jpg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2024/10/103308639-GettyImages-128384632-160x90.jpg 160w, https://cms.cnbcafrica.com/wp-content/uploads/2024/10/103308639-GettyImages-128384632-768x432.jpg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2024/10/103308639-GettyImages-128384632-1536x864.jpg 1536w" sizes="auto, (max-width: 1858px) 100vw, 1858px" /><figcaption class="wp-element-caption">View of Iran’s oil industry installations in Mahshahr, Khuzestan province, southern Iran. Kaveh Kazemi | Getty Images</figcaption></figure>



Oil prices slid more than 4% on Monday as Israel’s strikes on Iran over the weekend were dubbed as “limited” by local media, with Citi analysts discounting chances of an escalation that disrupts oil supplies.



Futures for global crude benchmark Brent slid 4.34% to $72.75 a barrel, while U.S. West Texas Intermediate futures dropped 4.54% to $68.52 per barrel.



Israel on Saturday attacked Iran’s military installations in three provinces in response to Tehran launching ballistic missiles at Israel on Oct. 1.



Iranian News agency Tasnim reported the attack, which killed four soldiers, had inflicted “limited damages.” The strike steered clear of oil, nuclear, and civilian infrastructure locations. Local petro news network said that Iran’s oil industry operation is “underway normally” with no disruptions.



For weeks, markets had braced themselves for an Israeli retaliation as Middle East tensions have continued to rise following the attack on Israel by Iran-backed Hamas on Oct. 7 last year.



Oil markets’ key consideration had been a direct engagement between both parties, with concerns of an attack on Iranian oil facilities rising in recent weeks. Iran accounts for up to 4% of global o



“The recent Israel military action is unlikely to be seen by the market as leading to an escalation that impacts oil supply,” Citi analysts wrote in a note on Monday, cutting the bank’s Brent oil forecast by $4 to $70 per barrel over the next three months.



Oil markets are also staring at an oversupply. “With Israel deliberately, and perhaps with some American encouragement, avoiding the targeting of crude oil facilities, the oil market is back to looking at an oversupplied market,” said Andy Lipow, president at Lipow Oil Associates.



Oil production has been increasing not just in key countries such as U.S., Canada and Brazil, but even among smaller players such as Argentina and Senegal, he added.



“Oil prices will remain under pressure for the rest of this year, it may be difficult to see Brent crude oil prices reaching $80 in the foreseeable future,” Lipow told CNBC via email.



The risk premium has come off a few dollars a barrel as the more limited nature of the strikes, including avoiding oil infrastructure, have raised hopes for a de-escalatory pathway, said Saul Kavonic, an energy analyst at MST Marquee.



The spotlight now will be on whether Iran will counter the attack in the coming weeks, which would see risk premium rise again, Kavonic told CNBC, noting that the overall trend still remains one of escalation, with the scope for another round of attacks remaining high.



During a cabinet meeting on Sunday, Iranian President Masoud Pezeshkian emphasized Iran’s right to react to Israel’s attack, but maintained that they do not seek war.



“We do not seek war, but we will defend our country and the rights of our people. We will give a proportionate response to the aggression,” he said.



Market attention will turn to Hamas‑Israel and Israel‑Hezbollah ceasefire talks that resumed over the weekend, director of mining and energy commodities research at Commonwealth Bank of Australia, Vivek Dhar said.



“Despite Israel’s choice of a low‑aggression response to Iran, we have doubts that Israel and Iran’s proxies (i.e. Hamas and Hezbollah) are on track for an enduring ceasefire,” Dhar wrote in a note.

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<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="461" src="https://cms.cnbcafrica.com/wp-content/uploads/2024/10/108049870-17292742572024-10-18t103613z_1061388036_rc2xmaa99x9x_rtrmadp_0_russia-brics-putin-growth-820x461.jpeg" alt="" class="wp-image-545076" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2024/10/108049870-17292742572024-10-18t103613z_1061388036_rc2xmaa99x9x_rtrmadp_0_russia-brics-putin-growth-820x461.jpeg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2024/10/108049870-17292742572024-10-18t103613z_1061388036_rc2xmaa99x9x_rtrmadp_0_russia-brics-putin-growth-300x169.jpeg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2024/10/108049870-17292742572024-10-18t103613z_1061388036_rc2xmaa99x9x_rtrmadp_0_russia-brics-putin-growth-160x90.jpeg 160w, https://cms.cnbcafrica.com/wp-content/uploads/2024/10/108049870-17292742572024-10-18t103613z_1061388036_rc2xmaa99x9x_rtrmadp_0_russia-brics-putin-growth-768x432.jpeg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2024/10/108049870-17292742572024-10-18t103613z_1061388036_rc2xmaa99x9x_rtrmadp_0_russia-brics-putin-growth-1536x864.jpeg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2024/10/108049870-17292742572024-10-18t103613z_1061388036_rc2xmaa99x9x_rtrmadp_0_russia-brics-putin-growth.jpeg 1858w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">Russian President Vladimir Putin attends the BRICS Business Forum in Moscow, Russia October 18, 2024.  Alexander Zemlianichenko | Via Reuters</figcaption></figure>



Russia is rolling out the red carpet to its geopolitical allies as it hosts the latest BRICS summit on Tuesday, pushing its agenda to create a “new world order” that challenges the West.



The group was initially comprised of Brazil, Russia, India and China before South Africa joined in 2010, giving the organization of rapidly economically-developing nations its current name. It has since morphed into a geopolitical forum for the world’s most powerful nations outside of the West.



The BRICS now have additional clout after Egypt, Ethiopia, Iran and the United Arab Emirates joined the group in January, with membership to the bloc becoming an attractive prospect for countries looking to boost trade, investment and economic development.



Russia has been trying to woo what’s collectively known as the “Global South” — or economically-developing countries in Asia, Africa, the Middle East and Latin America — and contrast to the “Global North” of industrialized nations, traditionally led by the U.S.



Russian President Vladimir Putin frequently comments on his ambition to establish what he calls a “new world order” to rival and usurp the geopolitical and economic pre-eminence enjoyed by the U.S.-led West.



Russia, holder of the rotating BRICS presidency and economically isolated and heavily sanctioned by the West, can also turn to this year’s summit to demonstrate that it still commands respect on the global stage and has powerful allies willing to turn a blind eye to its ongoing war in Ukraine.



Putin has described the beefed-up BRICS group as a “strong indication of the growing authority of the association and its role in international affairs” and signaled on Friday that he intends for the so-called “BRICS +” format to challenge the West on both a geopolitical and economic front.



“The countries in our association are essentially the drivers of global economic growth. In the foreseeable future, BRICS will generate the main increase in global GDP,” Putin told officials and businessmen&nbsp;last Friday&nbsp;at&nbsp;the&nbsp;BRICS business forum in Moscow,&nbsp;which precedes the group’s summit,&nbsp;in comments translated by Reuters.



“The economic growth of BRICS members will increasingly depend less on external influence or interference. This is essentially economic sovereignty,” Putin added.



Earlier in October, Putin said Moscow was open to using the summit for discussions with its allies on the “the parameters of interaction in the emerging multipolar world, and is open to discussing the issues of building a new world order with all our friends, partners and like-minded people,” he said, according to Russian state-owned news agency Tass.



Putin added that “it is in this spirit that we are preparing the BRICS and Outreach/BRICS Plus summit,” referring to the last day of the three-day summit when officials from almost 40 Asian, African, Middle Eastern and Latin American countries are attending as part of the group’s bid to expand ties with the “Global South.”



The expansion of the BRICS coalition is both significant and performative, one security analyst told CNBC.



“It is indicative of a collective movement away from the West, a demonstration of a fundamental shift within the world order that is seeking to challenge Western economic hegemony,” Callum Fraser,&nbsp;a research fellow in Russian and Eurasian security at the Royal United Services Institute (RUSI) think tank, told CNBC Monday.



Fraser added that it was “still unclear to what degree BRICS+ will be able to challenge the Western-dominated G7, or even to what degree they are able to align their visions of the international system.”



“Currently, the main glue that holds them together is the aspiration to achieve the same quality of life as in the West that they feel unable to achieve through cooperation with the West. Ultimately, BRICS+ is only anti-West in that it operates as an alternative institution. This means that it still remains to be seen what BRICS+ will provide for its member states, but increased cooperation among its members is extremely likely,” he said.



Russia’s chairing of the summit would be “utilized to maximum effect to demonstrate Russia’s strong position within this emerging order,” Fraser added.



<h2 class="wp-block-heading" id="h-global-leaders-attending"><a></a>Global leaders attending</h2>



The 16th BRICS summit is taking place under the theme of “strengthening multilateralism for&nbsp;just global development and&nbsp;security,” with the Kremlin stating that BRICS leaders will exchange views on&nbsp;“pressing issues on&nbsp;the&nbsp;global and&nbsp;regional agenda,” as well as on “the&nbsp;three main pillars of&nbsp;cooperation identified by&nbsp;the&nbsp;Russian chairmanship: politics and&nbsp;security, the&nbsp;economy and&nbsp;finance, and&nbsp;cultural and&nbsp;humanitarian ties.”



The Kremlin added that the possible expansion of the BRICS group through the establishment of a new category of “partner states” would also be discussed.



It’s unclear whether the elephant in the room — Russia’s ongoing war with Ukraine — will be acknowledged at the summit. Kremlin Spokesman Dmitry Peskov told the Izvestia newspaper that the conflict in Ukraine was not on the agenda, but he insisted that participants could “raise this issue at their discretion,” according to a Google translation.



The Kremlin appears eager to avoid mention of what it calls its “special military operation” in Ukraine, stating that the BRICS+ discussions would concern&nbsp;“pressing international issues, with a&nbsp;particular focus on&nbsp;the&nbsp;escalating situation in&nbsp;the&nbsp;Middle East and&nbsp;interactions between the&nbsp;BRICS countries and&nbsp;the&nbsp;Global South in&nbsp;the&nbsp;interests of&nbsp;sustainable development.”



Putin is set to hold meetings with various leaders in attendance, including India’s Prime Minister Narendra Modi, China’s President Xi Jinping, Turkey’s President Recep Tayyip Erdogan, Palestinian President Mahmoud Abbas and U.N. Secretary-General Antonio Guterres.



It’s also expected that Putin and his Iranian counterpart Masoud Pezeshkian&nbsp;could sign a “Comprehensive Strategic Partnership’ agreement” at the summit that could signal their commitment to deepening military and defense cooperation. following several years of exchanging military and technical support amid the war in Ukraine.



Meetings with South African President Cyril Ramaphosa and Egyptian President Abdel Fattah al-Sisi are also slated to take place this week, according to comments from Yury Ushakov, Putin’s foreign policy aide. Brazilian President Luiz Inácio Lula da Silva cancelled his trip to Russia after injuring his head in an accident at his home last weekend.



Saudi Arabia, which has been invited to join the BRICS&nbsp;group but has not yet formally acceeded, is also participating in the latest summit in the southwestern Russian city of Kazan. Argentina decided in 2023 not to join the group, citing a change in foreign policy.

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Russia pushes ‘new world order’ agenda as it hosts beefed-up BRICS summit

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="461" src="https://cms.cnbcafrica.com/wp-content/uploads/2024/10/108039375-1727312351704-gettyimages-1810856649-32-820x461.jpeg" alt="" class="wp-image-545014" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2024/10/108039375-1727312351704-gettyimages-1810856649-32-820x461.jpeg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2024/10/108039375-1727312351704-gettyimages-1810856649-32-300x169.jpeg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2024/10/108039375-1727312351704-gettyimages-1810856649-32-160x90.jpeg 160w, https://cms.cnbcafrica.com/wp-content/uploads/2024/10/108039375-1727312351704-gettyimages-1810856649-32-768x432.jpeg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2024/10/108039375-1727312351704-gettyimages-1810856649-32-1536x864.jpeg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2024/10/108039375-1727312351704-gettyimages-1810856649-32.jpeg 1858w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">Close up stack of gold bars, financial wealth concepts and business Vector Photo Gallery | Istock | Getty Images</figcaption></figure>



Gold is in a “new bullish phase” after prices notched another record high, said asset management firm Sprott Asset Management, echoing other analysts who have predicted that the bullion will continue to scale new heights.



“Gold has entered a new bullish phase, driven by factors like central bank buying, rising U.S. debt and a potential peak in the U.S. dollar,” Paul Wong, market strategist at Sprott Asset Management, wrote in a note, after the price of the yellow metal advanced to a fresh record of $2,700 per ounce on Monday.&nbsp;



Spot gold is currently trading at $2,729.14 per ounce, while gold futures are at $2,741.20.



“Rising U.S. debt-to-GDP ratios have historically led to higher gold prices due to concerns over the sustainability of debt, currency devaluation and debt monetization,” Wong continued.



The U.S. Congressional Budget Office expects public debt to rise from 98% of GDP in 2023 to 181% of GDP in 2053, the highest level in the country’s history.



As debt increases, governments might resort to printing money to address deficits, which can devalue the currency, Wong explained. This erosion of trust in fiat currency enhances gold’s appeal as a reliable store of value.



Persistent inflationary pressures and difficult macroeconomic conditions plaguing global economies suggest that central banks and investors are more likely to allocate to precious metals, he added.



According to World Gold Council data, the net purchases of gold by central banks in the first half of 2024 rose to 483 tonnes, 5% above the previous record set in the first half of 2023.



A growing chorus of analysts have predicted that the price of gold will continue to rise to $3,000, with some expecting the commodity to cross $2,800 in the next three months.



Gold prices “look better now” than ever before, said Michael Widmer, commodities strategist at Bank of America. “I think we’re closer to $3,000 pounds.”



Widmer cited elevated government debt levels and brewing geopolitical uncertainty as reasons for the his bullish outlook.



Pledges from Israel and its adversaries, Hamas and Hezbollah, to continue fighting in Gaza and Lebanon have diminished hopes of a resolution of the ongoing conflict in the Middle East.



Rising geopolitical tensions usually lead investors to flock to safe-haven assets such as gold, motivated by a desire to buffer against risks and instability in global markets.



Citi analysts have also held on to their view that gold will hit $3,000 in the next six to nine months. If oil prices spike due to a near-term escalation in the Middle East, they added, gold should see a lift.



Despite a drop in Chinese retail demand over the last three months, gold prices have still performed “extremely well,” which reflects the willingness of buyers to pay higher prices, according to Citi.



Meanwhile, Commonwealth Bank of Australia’s Vivek Dhar said in a note on Monday that he sees gold averaging $3,000 in the fourth quarter of next year as a result of “persistent weakness in the U.S. dollar.”



Still, Dhar said he expects gold to average $2,800 this quarter. Citi recently upgraded their view, also predicting that gold will hit $2,800 in three months.

108039375-1727312351704-gettyimages-1810856649-32

‘New bullish phase’? As gold hits another high, analysts say more records are in sight

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