The Israel-Iran conflict escalated over the weekend — not that you could tell by looking at the financial markets on Monday. The major U.S. stock benchmarks opened higher. Oil prices fell. Gold, the ultimate safe-haven asset, also edged lower. Abroad, the pan-European Stoxx 600 was slightly higher and stock indexes in the Asia-Pacific region climbed, too. It is basically the mirror opposite to Friday’s action, as Israel’s first round of strikes on Iran’s nuclear facilities coursed through global markets, sending equities lower, oil surging and gold gaining. Investors following the news over the weekend might’ve expected more of the same Monday, especially after learning that Israel attacked Iranian energy infrastructure. Iran’s missile strikes also damaged an oil refinery in Haifa, the Times of Israel reported . So why is the market on Monday so far shrugging it all off? In simple terms, traders and investors are betting that the attacks between the two longtime adversaries will not spillover into a broader regional conflict that disrupts the global economy. Whether that’s the right bet remains to be seen. As CNBC reported Monday , some market watchers say investors are underpricing “the risk of a major conflagration in the Middle East.” However, not long after Monday’s opening bell, The Wall Street Journal reported that Iran is signaling to other countries that it wants to end the fighting with Israel — evidence in support of the bet traders were already making. Deutsche Bank macro strategist Henry Allen weighed in on the subdued market reaction earlier Monday in a note to clients titled, “Will geopolitics actually have a market impact this time?” “Historically, it’s only been when it’s affected macro variables like growth and inflation,” Allen wrote. “So for markets, the geopolitical events that mattered were the stagflation shocks, like the 1970s oil crises, the Gulf War in 1990, and Russia’s invasion of Ukraine in 2022.” Allen pointed out that while Brent crude prices jumped around 7% on Friday to roughly $74 a barrel, the international oil benchmark is still below its 2024 average of roughly $80. “So this isn’t causing wider inflationary problems yet. Clearly, a larger price spike would evoke the 2022 scenario where central banks hiked rates to clamp down on inflation,” Allen wrote. “But so far at least, we’ve yet to see that. If anything, the extent of the market’s resilience to repeated shocks this year has been a significant story in itself.” Our main takeaway from Deutsche Bank’s note: where the price of oil goes in response to the Israel-Iran conflict matters the most for the global economy — and therefore the stock market. As CNBC’s senior markets commentator Michael Santoli put it Monday: “Equites aren’t going to overthink it if oil is not going to add in any more risk premium in response to anything like a conflict we’re seeing right now.” The biggest risk to oil prices is that Iran shuts down the Strait of Hormuz, a waterway situated between Iran and Oman that is “the world’s most important oil chokepoint,” according to the U.S. Energy Information Administration . Extended disruption to shipping in the Strait of Hormuz could result in oil prices spiking above $100 a barrel, Goldman Sachs estimated on Friday. About 20% of global oil production flows through the Strait of Hormuz, the firm said. To be sure, Goldman analysts said they did not believe trade disruptions had a high probability. Citigroup’s global head of commodities research, Max Layton, said he would’ve expected to see stronger oil prices again on Monday. “Clearly, there was a lot of short-covering, a lot of call-buying on Friday and no follow-through with actual long positions today,” Layton said on CNBC. Still, Layton said the market isn’t ignoring the Israel-Iran situation. “There’s already a very big geopolitical risk premium in the market. We estimate it’s around $10 to $12 at the moment, and that risk premium is there for a reason,” he said. “There’s been no real oil export or oil production disruption in Iran, and yet the market is trading $10 to $12 higher. That obviously reflects the potential for a significant, if temporary, disruption to the Strait of Hormuz supply.” An important counterbalance for crude prices right now is that the Organization of the Petroleum Exporting Countries is in the process of increasing oil production, Layton noted. That is “really important to help explain why there hasn’t been any follow-through in terms of fresh long positions in the market today,” he said. “Often investors, when they’re thinking about a trade, they need not just the short-term [outlook] to be bullish. And there’s obviously catalysts for higher prices in the very term. But they also need the medium-to-long-run outlook to be bullish. … Our 12-month forecast remains $65 Brent and we haven’t seen anything that would change that medium-to-long-term outlook, which is still bearish from these prices.” (See here for a full list of the stocks in Jim Cramer’s Charitable Trust.) 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