The rapid escalation of tensions between Iran and Israel, heightened when Teheran fired a barrage of at least 180 missiles into Israel on October 1, saw global oil prices surge by about 5% — the most in a year.

Brent crude rose again the next day to trade above $75 (€67) a barrel, after Israeli Prime Minister Benjamin Netanyahu vowed to retaliate, further increasing the risk of tit-for-tat escalation in a region that is responsible for a third of the world's oil supply.

A major escalation by Iran risks bringing the United States into the conflict, data provider Capital Economics wrote in a note to investorson the day of the attack, impacting oil prices that will remain "the key channel of transmission to the global economy."

"Iran accounts for about 4% of global oil output, but an important consideration will be whether Saudi Arabia increases production if Iranian supplies were disrupted," Capital Economics wrote. A 5% increase in oil prices adds about 0.1% to headline inflation in advanced economies.

Other analysts and traders say the market hasn't fully priced in the risk of an attack on Iranian oil facilities, or the idea that Teheran might try to block the Strait of Hormuz — something it's threatened many times without actually doing so. The narrow waterway at the mouth of the Persian Gulf handles almost 30% of the world's........

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