“The conflict poses a risk of higher oil prices, and risks to both inflation and the growth outlook,” Karim Basta, chief economist at III Capital Management, told Reuters.

Hedge fund manager Pierre Andurand, a top energy trader, noted on X on Sunday that many people had asked him “if the Hamas attacks on Israel will have an impact on oil prices.”

While Andurand does not expect a big impact on oil supply or a large price spike in the next few days, he acknowledged that global oil inventories are low “and the Saudi and Russian production cuts will lead to more inventories draws over the next few months. The market will eventually have to beg for more Saudi supply, which I believe, will not happen sub $110 Brent.”

Brent crude is currently priced at about $88, having jumped more than 3% since the attacks on Israel. In September, the U.S. Energy Information Administration offered its short-term energy outlook, writing that with Saudi Arabia’s extended production cut through year’s end, its forecast averages $93 per barrel in the fourth quarter, with price declines beginning next year as inventories build.

Of course, that was before this weekend’s eruption of violence. The agency’s next outlook is due this week.

Andurand noted that “over the last 6 months we have seen a very large increase in Iranian supply” due to the weak enforcement of sanctions.

Iran, of course, is a big backer of Hamas, and, given that, Andurand believes there’s a “good probability” that the Biden administration will begin more strictly enforcing sanctions on Iranian oil exports. That would “further tighten the oil market,” he wrote. 

“Iran remains a very big wild card,” Helima Croft, chief commodities strategist at RBC Capital Markets and a former CIA analyst, told Bloomberg. “Israel will escalate its long-running shadow war against Iran” and “what is unpredictable is how Iran would respond to such an intensification.”

When sanctions were imposed on Iran in 2011, the country threatened to block the Strait of Hormuz, a narrow shipping route that handles roughly a third of the world’s waterborne oil, according to Bloomberg. Iran backed away from the threat, with the U.S. closely monitoring the waterway for signs of disruption. But the possibility of such a scenario, however extreme, hints at the kind of uncertainty traders face.

Chamath Palihapitiya, CEO of VC firm Social Capital, suggested oil prices were bound to jump, writing on Sunday: “How does oil not spike again now on the back of two hot wars (Israel-Hamas and Russia-Ukraine) and a 1.5M barrel production cut by OPEC with an SPR [Strategic Petroleum Reserves] that is at the same level it was in the mid 1980s?”

“There is definitely going to be a fear trade put in place,” Phil Flynn, analyst at Price Futures Group in Chicago, told MarketWatch. “While in the short term there is no impact directly on supply, it’s obvious how things play out over the next 24 to 48 hours could change that.”