There was something almost absurdist on the attention given this weekend to Israel’s peace talks with Saudi Arabia, and whether they would continue in light of the surprise attack from Gaza that has left hundreds dead, scores captured and thousands injured.

That’s not to discount both the tangible and symbolic benefits of a potential Israeli-Saudi deal, but the broader point of the peace process that goes all the way back to 1978 is to leave the region free from constant war and violence; nothing seems further from reality.

Meanwhile, financial markets have to price the new violence in the here and now. Tragic as it is, markets don’t really care that much about economic demand in Israel (28th ranked GDP in 2022, per the World Bank), much less the West Bank and Gaza (coming in at 120), but rather on what it means for OPEC member Iran.

The Wall Street Journal reported Iran was involved in directly planning the attacks, which raises the prospect that the U.S. could increase enforcement of sanctions on its exports. Analysts at Goldman Sachs say the de-escalating trend in regional tensions before the weekend attacks had been an important factor behind the rise in Iranian oil production, by nearly a half million barrels per day over the last year. On the bank’s numbers, for every 100,000 barrel a day decline in Iran’s production next year, Brent crude prices rise by a bit more than $1 per barrel.

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