“In a world when you don’t know what to do, you buy government bonds,” said Steen Jakobsen, chief investment officer at Saxo Bank.
“It’s very difficult to measure a perceived threat of military intervention, but immediately we know Middle East oil prices will rise,” said Ishaq Siddiqi, a London-based market strategist at ETX Capital.
Syria is not a major oil producer, but there’s a spill-over risk if neighboring nations become engulfed in the conflict, said Emad Mostaque, a market strategist at Noah Capital.
Mostaque forecasts prices will jump further if a strike on Syria somehow leads to a disruption in global oil supplies. Saudi Arabia produces nearly 12 million barrels of crude a day. Iraq and Iran are also big producers.
Sanctions have already severely restricted oil exports from Syria, according to the U.S. Energy Information Administration. But Iran has been operating under sanctions for years, and it hasn’t imploded yet.
While global stocks have been selling off, equity markets in the Middle East have been posting the most dramatic declines. The benchmark index in Dubai has tumbled by 7%, while markets from Abu Dhabi to Bahrain to Kuwait also moved roughly 1% to 3% lower Tuesday.
Turkey, which neighbors Syria, has been particularly hard hit in recent months as it has faced its own share of and heightened concerns about the Syrian conflict. The country’s benchmark stock index fell 3% Tuesday and the Turkish lira hit a record low.
Syria shares a border with Turkey, Iraq, Jordan, Israel and Lebanon. In Israel, the main stock index shed 2% Tuesday.
Emerging market equities and currencies across the globe have been hammered in recent months as investors have worried about the impact of the pulling back on its massive that has pumped liquidity into markets and helped resuscitate the U.S. economy.