Investors are watching to see if the Israel-Hamas war involves other nations, which might push up prices further and inflict a major blow to the world economy. Oil prices fell on Monday after rising last week.

At 0645 GMT, Brent futures were down 33 cents, or 0.4%, at $90.56 a barrel. West Texas Intermediate (WTI) crude for the United States dropped 0.3% or 26 cents to $87.43 a barrel.

Due to investors factoring in the prospect of a larger Middle East conflict, both indexes had their greatest daily percentage gains since April on Friday, rising by close to 6%.

WTI rose 5.9% and Brent surged 7.5% for the week. According to Hiroyuki Kikukawa, president of NS Trading, a division of Nissan Securities, “Investors are trying to assess the impact of the conflict while a sizable ground assault has not started after the 24-hour deadline that Israel first advised residents of the northern half of Gaza to flee to the south.”

“The impact that may involve oil-producing countries has been factored into the prices to some extent, but if an actual ground invasion were to occur and have an impact on oil supply, the prices could easily exceed $100 a barrel,” he stated.

Because Israel is not a major producer, the Middle East war has not significantly influenced the world’s oil and gas supply. But despite worries about any possible escalation involving Iran, the conflict between Israel and the Islamist organization Hamas represents one of the greatest geopolitical dangers to oil markets since Russia’s invasion of Ukraine last year.

Market players are analyzing the potential effects of a larger conflict on supply from nations in the top oil-producing areas of the globe, such as Saudi Arabia, Iran, and the United Arab Emirates.

According to a note from Commonwealth Bank of Australia analyst Vivek Dhar on Monday, the U.S. will probably fully enforce its restrictions on Iran’s oil exports if it is discovered that Tehran was directly engaged in the Hamas attack.

“The U.S. has turned a blind eye on its sanctions on Iran’s oil exports this year as it looked to improve diplomatic ties with Iran,” he stated.

“The 0.5-1 million barrels per day increase in Iran’s oil exports this year – equivalent to 0.5-1% of global oil supply – is at risk of being sidelined if U.S. sanctions are enforced in full.”

The world was stunned by Hamas terrorists’ horrific assault across Israeli border communities on Saturday. Israeli Prime Minister Benjamin Netanyahu threatened to “demolish Hamas” as his army prepared to enter the Gaza Strip in pursuit of them.

Iran issued a warning on Saturday, stating that failure to stop Israel’s “war crimes and genocide” might have “far-reaching consequences.”

After three days of shuttle diplomacy between Arab governments, U.S. Secretary of State Antony Blinken will travel back to Israel on Monday to discuss “the way forward” amid concerns that the crisis could worsen.

To fill gaps in the system set up to penalize Moscow for its invasion of Ukraine, the U.S. this week levied the first sanctions on owners of tankers transporting Russian oil priced higher than the G7’s price threshold of $60 per barrel.

One of the world’s major exporters of crude oil, Russia, may see a decrease in supplies due to increased U.S. surveillance of its exports.