In Europe, economists said the bar for another rate hike by the European Central Bank is high.
The war between the Islamist group Hamas and Israel poses one of the most significant geopolitical risks to oil markets since Russia’s invasion of Ukraine last year.
“If the Ukraine war taught us anything, it’s not to underestimate the effect of geopolitics,” Nomura’s George Moran said on the bank’s weekly podcast.
Other energy markets could be affected, as seen in recent developments such as Chevron’s discontinuation of natural gas exports through a major undersea pipeline between Israel and Egypt.
Analysts say rising oil prices are unlikely to have a significant impact on U.S. gas prices or consumer spending.
However, Cresset Capital’s Jack Ablin said the situation deserves follow-up.
“If oil production is suddenly cut off or transportation is interrupted, it will create problems not only for economies, but also for markets,” he said.
Crude oil, oil company stocks and commodities in general, and gold in particular, could serve as an effective hedge for investors, he added.