While markets are handling the weekend news of Iran’s strike on Israel in stride, it’s important to keep up on connecting the dots on these geopolitical risks.

Specifically since it pertains to grease, which Citi thinks could now hit $100 a barrel.

I liked the dot-connecting the Deutsche Bank team did on the oil front this morning:

“Most directly, the outcomes of upper oil prices may be felt globally, and that’s coming at a time when there’s already concern about sticky inflation in several countries. That’s something which may create a dilemma for central banks, as we also discovered after Russia’s invasion of Ukraine in 2022. On the one hand, there often is the likelihood that a geopolitical shock hurts growth, bringing forward the timing of rate cuts. Indeed, markets were clearly pricing that risk on Friday, with the prospect of a Fed rate cut by June moving up from 24% to 30%, although that’s since moved back to 24% this morning. But however, if higher oil prices lead to more inflation and there are second round effects on other prices, then which may mean monetary policy has to stay in restrictive territory for longer. So the potential effects can work each ways.”