The main risk is rising oil prices. Since the October 7 Hamas attack on Israel and the outbreak of fighting in the Gaza Strip, experts have warned of the possibility of a major conflict that could reduce global oil supplies and send shock waves through the global economy. Markets have largely ignored these threats: oil prices remained low, as traders were confident of stable global supplies. However, after Iran fired rockets at Israel, oil prices began to rise, reflecting concerns about a regional escalation.
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Particularly noticeable was the rise in Brent crude, which recorded its largest weekly gain in a year after President Biden’s statements of support for Israel. Tina Fordham, a former Citi analyst, noted that investors have begun to pay attention to the Middle East, anticipating the possibility of negative impact on markets. The main concern is that any attack on Iran’s oil infrastructure could make the situation much worse.
