Every week, market veteran and president of Winston Capital Advisors, Fabian Onetti, gives his take on what will impact markets in the weeks ahead.

Many of my clients have asked me in the last couple of weeks what is going on in the Middle East as it has been taking up a lot of the headlines in the media lately.

The latest developments started with the reversal of fortunes of the war in Syria. The nation’s president Bashar al-Assad was almost losing the war. However, with the help of Russia and Hezbollah - and indirectly the US and its allies fighting ISIS - it was able to not only stabilize the front but also mount an offensive to reconquer lost territory to the rebels.

Saudi Arabia and Israel grew very concerned about Hezbollah, empowered by its victories in this brutal war. The two do not care much for Syria but are sworn enemies of Hezbollah, which in turns is supported by Iran.

Hezbollah has virtual control of Southern Lebanon, which borders with Israel.

This week Saudi Arabia called Prime Minister Saad Hariri of Lebanon and ‘made’ him resign from his job once he was in Ryad. The accusation, according to many press reports, was Hariri reached a compromise with Hezbollah in the ruling of Lebanon.

To make matters more complicated, we also have seen the arrest of over 200 prominent people in Saudi by the hand of the new crown prince Mohammad Bin Salman under alleged corruption charges. Amongst the arrested is billionaire and well known to Wall Street, Prince Alwaleed.

Some analysts believe that Salman’s ultimate objective is to eliminate any possible connection between Saudi Arabia and its neighbors and any terrorist organizations. Remember, this was the main allegation in the confrontation with Qatar and Yemen. Saudi Arabia and Israel are supported by the United States and especially the new Trump Administration.

Now many fear that war will break out at any moment. Iran and Saudi Arabia could attack each other using Lebanon as a proxy, most likely by a preemptive attack of Israel into Hezbollah-controlled territory in Southern Lebanon.

How this affects the markets?

Thankfully for now, not much. Only oil is having a bid given the possibility of disruptions of supply from the Gulf.

We have seen in the past incursions of Israel into Southern Lebanon with the purpose of controlling Hezbollah. What is different this time?

Hezbollah feels very strongly after their victories in Syria, Russia is involved in the conflict and the United States supports Saudi Arabia and Israel.  Some analysts are saying that in case of a full blown conflict, oil could reach $200!

Let’s hope cool heads prevail and nothing major happens. Sustained oil prices at those levels could trigger the world into a recession and the market will not like it.

Winston Capital Advisors is a firm that advises international advisors on capital markets and wealth planning. A former director at Morgan Stanley, Onetti has over 30 years of experience in international wealth management.