70% chance Israel-Hamas war spreads beyond Gaza, threatening oil: strategist

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70% chance Israel-Hamas war spreads beyond Gaza, threatening oil: strategist
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‘Odds of war with Hezbollah are underrated,’ says BCA Research

The Israel-Hamas war has a more than 50% chance of drawing in militant groups from Lebanon or Syria, or producing a direct conflict with Iran — creating more oil disruptions than financial markets currently think.

Two- BX:TMUBMUSD02Y through 30-year Treasury yields BX:TMUBMUSD30Y were also higher as investors sold off government debt and abandoned the flight-to-safety trades seen last week. And oil prices declined following last week’s rally, with Brent crude BRN00, -1.00% down 1.2% to slip below $90 a barrel, while the U.S. benchmark CL00, -0.70% CL.1, -0.70% dropped 1%.

If oil prices rise further and price pressures do re-emerge, expectations of additional monetary action from policy makers could threaten a renewed bond rout, she said. “In light of the situation in Israel, it is prudent for investors to maintain a diversified portfolio across different asset classes, with a particular emphasis on high quality and defensives.”

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