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The impact may take time to become clear, and would depend on how long the conflict lasts, how intense it becomes, and whether it spreads to other parts of the region. “The markets will also be following what the scenarios are looking like,” he said, and whether, after decades of instability in the Middle East, this outbreak of violence evolves differently.That and related issues will likely vault high on the agenda of global financial leaders gathering this week in Morocco for meetings of theto take stock of a global economy that remains in a deep state of flux from the pandemic and rising trade tensions.
With conflict now raging in a major oil-producing region, the reaction among traders and major players like Iran and Saudi Arabia will be watched closely to see if another price surge is coming, while“The conflict poses a risk of higher oil prices, and risks to both inflation and the growth outlook,” said Karim Basta, chief economist at III Capital Management, leaving the Fed to sort out whether higher prices or slower growth is the greater concern.